SUSTAINABILITy rEPOrT - Sabesp

SUSTAINABILITY REPORT

 

Sabesp – companhia de saneamento ambiental do estado de são paulo 

 

 

ownership structure 

50.3% São Paulo State Government, 24.9% NYSE, 24.8% Bovespa 

15,019 

employees 

Largest water and sewage company in the Americas and fifth largest in the world in number of customers 

ranking 

27.7 million 

customers 

363

operation  coverage indicators  market value  adjusted ebitda  adjusted ebitda margin  annual investments  annual profits  dividend per share  ticker symbol

water:

cities, including São Paulo 

100%, sewage collection: 83%, sewage treatment: 77% 

R$ 19.5 billion  R$ 3.6 billion  33.5%  R$ 2.5 billion  R$ 1.9 billion  R$ 2,345  SBSP3 – BM&FBovespa; SBS (Level III ADR) – NYSE

cities served by sabesp 1 Adamantina RB   2 Adolfo RT   3 Águas da Prata RG   4 Águas de Santa Bárbara RA   5 Águas de São Pedro RM   6 Agudos RM   7 Alambari RA   8 Alfredo Marcondes RB   9 Altair RG   10 Alto Alegre RT   11 Alumínio RM   12 Álvares Machado RB   13 Álvaro de Carvalho RB   14 Alvinlândia RA   15 Angatuba RA   16 Anhembi RM   17 Anhumas RB   18 Aparecida d’Oeste RT   19 Apiaí RR   20 Araçariguama RM   21 Arandu RA   22 Arapeí RV   23 Arco-Íris RB   24 Arealva RM   25 Areiópolis RM   26 Arujá ML   27 Aspásia RT   28 Assis RB   29 Auriflama RT   30 Avaí RT   31 Avaré RA   32 Balbinos RT   33 Bananal RV   34 Barão de Antonina RA   35 Barra do Chapéu RR   36 Barra do Turvo RR   37 Barueri MO   38 Bastos RB   39 Bento de Abreu RT   40 Bernardino de Campos RA   41 Bertioga RS   42 Biritiba-Mirim ML   43 Bocaina RM   44 Bofete RM   45 Boituva RM   46 Bom Sucesso de Itararé RA   47 Borá RB   48 Boraceia RM   49 Botucatu RM   50 Bragança Paulista MN   51 Brejo Alegre RT   52 Buri RA   53 Buritizal RG   54 Cabreúva RJ   55 Caçapava RV   56 Cachoeira Paulista RV   57 Caiabu RB   58 Caieiras MN   59 Cajamar MN   60 Cajati RR   61 Cajuru RG   62 Campina do Monte Alegre RA   63 Campo Limpo Paulista RJ   64 Campos do Jordão RV   65 Cananeia RR   66 Canas RV   67 Cândido Rodrigues RT   68 Capão Bonito RA   69 Capela do Alto RM   70 Caraguatatuba RN   71 Carapicuíba MO   72 Cardoso RT   73 Cássia dos Coqueiros RG   74 Catiguá RT   75 Cesário Lange RM   76 Charqueada RM   77 Colômbia RG   78 Conchas RM   79 Coroados RT   80 Coronel Macedo RA   81 Cotia MO   82 Cruzália RB   83 Cubatão RS   84 Dirce Reis RT   85 Divinolândia RG   86 Dolcinópolis RT   87 Dourado RM   88 Duartina RA   89 Echaporã RB   90 Eldorado RR   91 Elias Fausto RJ  

[ map on the side TAB ] 92 Embaúba RT   93 Embu das Artes MS   94 Embu-Guaçu MS   95 Emilianópolis RB   96 Espírito Santo do Pinhal RG   97 Espírito Santo do Turvo RA   98 Estrela d’Oeste RT   99 Estrela do Norte RB   10 0 Euclides da Cunha Paulista RB   10 1 Fartura RA   10 2 Fernando Prestes RT   10 3 Fernandópolis RT   10 4 Fernão RA   10 5 Ferraz de Vasconcelos ML   10 6 Flora Rica RB   10 7 Floreal RT   10 8 Flórida Paulista RB   10 9 Florínea RB   11 0 Franca RG   11 1 Francisco Morato MN   11 2 Franco da Rocha MN   11 3 Gabriel Monteiro RB   11 4 Gália RA   11 5 Gastão Vidigal RT   11 6 General Salgado RT   11 7 Guapiara RA   11 8 Guarani D’Oeste RT   11 9 Guararema RV   12 0 Guareí RA   12 1 Guariba RG   12 2 Guarujá RS   12 3 Guzolândia RT   12 4 Hortolândia RJ   12 5 Iacri RB   12 6 Iaras RA   12 7 Ibirá RT   12 8 Ibiúna RM   12 9 Icém RG   13 0 Igarapava RG   13 1 Igaratá RV   13 2 Iguape RR   13 3 Ilha Comprida RR   13 4 Ilhabela RN   13 5 Indiaporã RT   13 6 Inúbia Paulista RB   13 7 Iporanga RR   13 8 Irapuã RT   13 9 Itaberá RA   14 0 Itaí RA   14 1 Itanhaém RS   14 2 Itaóca RR   14 3 Itapecerica da Serra MS   14 4 Itapetininga RA   14 5 Itapeva RA   14 6 Itapevi MO   14 7 Itapirapuã Paulista RR   14 8 Itaporanga RA   14 9 Itaquaquecetuba ML   15 0 Itararé RA   15 1 Itariri RR   15 2 Itatiba RJ   15 3 Itatinga RM   15 4 Itirapuã RG   15 5 Itobi RG   15 6 Itupeva RJ   15 7 Jaborandi RG   15 8 Jacupiranga RR   15 9 Jales RT   16 0 Jambeiro RV   16 1 Jandira MO   16 2 Jarinu RJ   16 3 Jeriquara RG   16 4 Joanópolis MN   16 5 Juquiá RR   16 6 Juquitiba RR   16 7 Lagoinha RV   16 8 Laranjal Paulista RM   16 9 Lavrinhas RV   17 0 Lins RT   17 1 Lorena RV   17 2 Lourdes RT   17 3 Lucélia RB   17 4 Lucianópolis RA   17 5 Luiziânia RB   17 6 Lupércio RA   17 7 Lutécia RB   17 8 Macedônia RT   17 9 Magda RT   18 0 Mairiporã MN   18 1 Marabá Paulista RB   18 2 Maracaí RB  

18 3 18 4 18 5 18 6 18 7 18 8 18 9 19 0 19 1 19 2 19 3 19 4 19 5 19 6 19 7 19 8 19 9 20 0 20 1 20 2 20 3 20 4 20 5 20 6 20 7 20 8 20 9 21 0 21 1 21 2 21 3 21 4 21 5 21 6 21 7 21 8 21 9 22 0 22 1 22 2 22 3 22 4 22 5 22 6 22 7 22 8 22 9 23 0 23 1 23 2 23 3 23 4 23 5 23 6 23 7 23 8 23 9 24 0 24 1 24 2 24 3 24 4 24 5 24 6 24 7 24 8 24 9 25 0 25 1 25 2 25 3 25 4 25 5 25 6 25 7 25 8 25 9 26 0 26 1 26 2 26 3 26 4 26 5 26 6 26 7 26 8 26 9 27 0 27 1 27 2 27 3

Mariápolis RB   Marinópolis RT   Meridiano RT   Mesópolis RT   Miguelópolis RG   Mira Estrela RT   Miracatu RR   Mirante do Paranapanema RB   Mococa RG   Mogi das Cruzes* ML  Mombuca RJ   Monções RT   Mongaguá RS   Monte Alto RT   Monte Aprazível RT   Monte Mor RJ   Monteiro Lobato RV   Morungaba RJ   Narandiba RB   Nazaré Paulista MN   Nhandeara RT   Nipoã RT   Nova Campina RA   Nova Canaã Paulista RT   Nova Granada RT   Nova Guataporanga RB   Nova Luzitânia RT   Novo Horizonte RT   Óleo RA   Onda Verde RT   Oriente RB   Orindiúva RT   Osasco MO   Oscar Bressane RB   Oswaldo Cruz RB   Ouroeste RT   Palmares Paulista RT   Palmeira d’Oeste RT   Paraguaçú Paulista RB   Paranapanema RA   Paranapuã RT   Parapuã RB   Pardinho RM   Pariquera-Açu RR   Paulínia RJ   Paulistânia RA   Paulo de Faria RT   Pederneiras RM   Pedra Bela MN   Pedranópolis RT   Pedregulho RG   Pedrinhas Paulista RB   Pedro de Toledo RR   Peruíbe RS   Piacatu RB   Piedade RM   Pilar do Sul RA   Pindamonhangaba RV   Pinhalzinho MN   Piquerobi RB   Piracaia MN   Piraju RA   Pirapora do Bom Jesus MO   Pirapozinho RB   Piratininga RT   Planalto RT   Platina RB   Poá ML   Poloni RT   Pongaí RT   Pontalinda RT   Pontes Gestal RT   Populina RT   Porangaba RM   Pracinha RB   Praia Grande RS   Pratânia RM   Presidente Alves RT   Presidente Bernardes RB   Presidente Epitácio RB   Presidente Prudente RB   Quadra RM   Quatá RB   Queiróz RB   Queluz RV   Quintana RB   Redenção da Serra RV   Regente Feijó RB   Registro RR   Restinga RG   Ribeira RR  

27 4 Ribeirão Branco RA   27 5 Ribeirão Corrente RG   27 6 Ribeirão do Sul RA   27 7 Ribeirão dos Índios RB   27 8 Ribeirão Grande RA   27 9 Ribeirão Pires MS   28 0 Rifaina RG   28 1 Rio Grande da Serra MS   28 2 Riolândia RT   28 3 Riversul RA   28 4 Rosana RB   28 5 Roseira RV   28 6 Rubiácea RT   28 7 Rubineia RT   28 8 Sagres RB   28 9 Salesópolis ML   29 0 Salmourão RB   29 1 Salto de Pirapora RM   29 2 Sandovalina RB   29 3 Santa Albertina RT   29 4 Santa Clara d’Oeste RT   29 5 Santa Cruz da Esperança RG   29 6 Santa Cruz do Rio Pardo RA   29 7 Santa Ernestina RT   29 8 Santa Maria da Serra RM   29 9 Santa Mercedes RB   30 0 Santa Rosa do Viterbo RG   30 1 Santa Salete RT   30 2 Santana da Ponte Pensa RT   30 3 Santana de Parnaíba MO   30 4 Santo Anastácio RB   30 5 Santo Antônio do Jardim RG   30 6 Santo Antônio do Pinhal RV   30 7 Santo Expedito RB   30 8 Santópolis do Aguapeí RB   30 9 Santos RS   31 0 São Bento do Sapucaí RV   31 1 São Bernardo do Campo MS   31 2 São Francisco RT   31 3 São João da Boa Vista RG   31 4 São João das Duas Pontes RT   31 5 São José dos Campos RV   31 6 São Lourenço da Serra RR   31 7 São Luís do Paraitinga RV   31 8 São Manuel RM   31 9 São Miguel Arcanjo RA   32 0 São Paulo MC   32 1 São Roque RM   32 2 São Sebastião RN   32 3 São Vicente RS   32 4 Sarapuí RA   32 5 Sarutaiá RA   32 6 Sebastianópolis do Sul RT   32 7 Serra Azul RG   32 8 Serra Negra RG   32 9 Sete Barras RR   33 0 Silveiras RV   33 1 Socorro MN   33 2 Sud Mennucci RT   33 3 Suzano ML   33 4 Taboão da Serra MO   33 5 Taciba RB   33 6 Taguaí RA   33 7 Tapiraí RR   33 8 Taquarituba RA   33 9 Taquarivaí RA   34 0 Tarabaí RB   34 1 Tarumã RB   34 2 Tatuí RM   34 3 Taubaté RV   34 4 Teodoro Sampaio RB   34 5 Terra Roxa RG   34 6 Timburi RA   34 7 Torre de Pedra RM   34 8 Tremembé RV   34 9 Três Fronteiras RT   35 0 Tupã RB   35 1 Turiuba RT   35 2 Turmalina RT   35 3 Ubatuba RN   35 4 Ubirajara RA   35 5 União Paulista RT   35 6 Urânia RT   35 7 Uru RT   35 8 Valentim Gentil RT   35 9 Vargem MN   36 0 Vargem Grande Paulista MO   36 1 Várzea Paulista RJ   36 2 Vitória Brasil RT   36 3 Zacarias RT  

* partial and bulk water supply

COMPANHIA DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO


Board of Directors

Alberto Goldman, Alexander Bialer, Andrea Sandro Calabi  Dilma Pena, Edson de Oliveira Giriboni, Heraldo Gilberto de Oliveira, Jerônimo Antunes, Reinaldo Guerreiro, Sidney Estanislau Beraldo (until 12/13/2012), Walter Tesch 

Executive Committee

Dilma Pena, Chief Executive Officer  João Baptista Comparini, Technology, Projects and Environment Officer (until 02/21/2013)  João Paulo Tavares Papa, Technology, Projects and Environment Officer (since 03/21/2013)  Luiz Paulo de Almeida Neto, Regional Systems Officer  Manuelito Pereira Magalhães Junior, Corporate Management Officer  Paulo Massato Yoshimoto, Metropolitan Officer  Rui de Britto Álvares Affonso, Economic and Financial and Investor Relations Officer 

2012 sustainability report Coordination  edition  Assistant Editor 

André Lacerda and Priscila Costa da Silva  André Lacerda and Vera Freire  Paula Franco Mendes  

Proofreading 

Adriano Stringhini, Paula Franco Mendes, Priscila Costa da Silva e Vera Freire

Writers   

Ana Lucia Fonseca Rodrigues Szajubok, Eliana Kazue Kitaraha, Mara Ramos,

Work Group          Outside consultant  photos 

Priscila Costa da Silva, Silvana de Almeida Nogueira, Wady Roberto Bon  Ana Lucia Fonseca Rodrigues Szajubok , André Lacerda, Angela Beatriz Airoldi, Cristina Gonçalves Tabosa Alves, Edison Airoldi, Eliana Kazue Kitaraha, Elizabeth Ayres Gdikian, Eridane Batista Furlan, Mara Ramos, Paula Franco Mendes, Paula Marcia Sapia Furukawa, Priscila Costa da Silva, Roseli Chistoni, Silvana de Almeida Nogueira, Vera Freire, Wady Roberto Bon, Wanderley da Silva Paganini  Weingrill Informação e Comunicação Ltda.  Sabesp Team 

  Concept, Artwork and Graphic Design 

TAOcriativo.com.br

project management

Marina Vergueiro Leme

executive production

Thiago Cunha Meira

art direction  design Cover photo  review 

André Salerno e Jorge Monge Kafeja Cavalcante e Marcelo Salvador Antonio Brasiliano (View of São Paulo, Guarapiranga Dam) Luciana Maria Sanches  

www.sabesp.com.br/rs2012

You will find codes (QR codes) similar to this throughout the report, which provide access to the digital version of our publication. In order to obtain additional information and updates regarding Sabesp’s sustainability practices, download the smartphone app to read such codes, or access the link above.


reference in sanitation 

6

message from the chairman of the board 

development driven by sustainability 

7

message from the CEO 

fifth largest sanitation company of the world 

8

Profile 

THE SEARCH FOR EFFICIENCY IN THE NEW REGULATED ENVIRONMENT 

14

Reliable Water Supply in an Environment of Water Shortage 

18

EXPANSION OF THE SANITARY DRAINAGE SYSTEM AND RECLAIM OF WATER RESOURCES 

24

MANAGEMENT WITHIN THE CURRENT CONTEXT OF THE SECTOR 

34

CARING FOR THE ENVIRONMENT: PRESENT AND FUTURE 

52

SHAPING THE CITIZENS OF THE FUTURE 

58

ANNUAL BALANCE SHEET / 2012

76 

Reporting Parameters and Process

78 

Materiality Matrix

79 

Location of GRI Indicators

80 

Location of Global Pact Principles

82

reference in sanitation message from the chairman of the board

São Paulo steadily consolidates itself as a reference in basic sanitation for the rest of the country. The reason behind such statement is simple. According to governor Geraldo Alckmin, this subject is a matter of public health and, therefore, addressed as a top priority by the government. In addition to such approach, increased investments in construction and renovation works by Sabesp will allow us to universalize sanitation in cities serviced by the company by the end of this decade.   Sabesp has ended yet another successful year. Regarding water supply, the company continued to expand supply systems, which is extremely important due to its operations in areas with water shortage. This year’s general customer satisfaction index reached 89%, as indicated by the respective survey. The population’s growing demand regarding the preservation of our watersheds and water sources is still being addressed by structural projects, which will expand sewage collection and treatment services, such as the decontamination of the Tietê river basin or Onda Limpa, on the State’s Northern Coast. 

6

State of São Paulo – Sabesp’s current operating base – concentrates 22% of the country’s residents. Its area accounts for 2.9% of Brazilian territory 

GRI 1.1

The recently-deployed Se Liga na Rede program is no less important than others, mainly due to its unquestionable inclusive nature. In south São Paulo, Sabesp started to connect low-income family homes to the sewage system without any additional charge. These interventions will help preserve the Billings dam, one of our most important watersheds.  Despite its recent release, the program has shown very high adhesion. This result is attributed to the Se Liga Agents, residents of these communities contracted by Sabesp. They present the project to stakeholders and describe the advantages of sewer connection. These benefits will be spread throughout the State, covering 192,000 connections.   Fast-paced works will universalize sanitation in the São Paulo countryside by 2014. Once again, I would like to emphasize the environmental gains expected for the near future. After implementing and operating all equipment, nature will finally be able to recover the streams and brooks.  This is already the case of the Paraíba do Sul river’s São Paulo length, whose regeneration was once again recognized

by the National Water Agency (ANA). Associated to the Department of Environment, the agency attributes considerable improvements of the river’s quality, including the reinstatement of fish populations, to the investments effected by Sabesp within the region. Such improvement also boosted tourism, economy and, most importantly, the quality of life of the local population.  This year, Sabesp celebrated its tenth year listed on BM&FBovespa’s Novo Mercado tier and NYSE. We visited the New York Stock Exchange to celebrate one decade of efficient management and outstanding results regarding share appreciation. In 2013, the company celebrates its 40th anniversary. Everything indicates that this will be yet another years of positive results, while São Paulo maintains course towards environmental and social sustainability.

Edson de Oliveira Giriboni  Chairman of the Board of Directors of Sabesp

development driven by sustainability GRI 1.1

In 2012, tax incentives were the main element behind economic politics focused on promoting Brazil’s development. Despite being highly-anticipated by the segment, the benefit did not cover sanitation, which would have allowed Sabesp to broaden its investments. The constant strive to perfect and improve our management practices allowed us to invest R$ 2.5 billion. Our profits totaled R$ 1.9 billion, a 56.3% increase compared to the previous year. It is worth noting that we paid a total of R$ 654 million in PIS/Cofins.  Our share market performance was also extremely significant, increasing Sabesp’s market value by 67% and reaching R$ 19.8 billion this year. Our shares recorded the third highest Ibovespa appreciation rate. In the U.S. market, the company’s ADRs rose 50.2%, while Dow Jones recorded a 7.3% high. We also had the privilege of celebrating our tenth year listed on BM&FBovespa’s Novo Mercado tier and on the New York Stock Exchange (NYSE).  Operational performance was also noteworthy. We performed over 212,000 new water connections, the highest number since 2000. Considering that

we also operate in regions of water shortage, we searched for new watersheds in order to ensure reliable supply to 27.7 million customers. We have fulfilled our commitment to launch the bidding process to implement the São Lourenço Production System. Upon completion, the system will integrate the São Paulo Metropolitan Region’s supply system, which covers 20 million people.  Since we already siphon waters at 80 kilometers to supply the major city, this year witnessed the implementation of one of our strategies to overcome sanitation impacts generated by climate changes. We have inaugurated the Aquapolo Ambiental, built to supply the Capuava Petrochemical Complex, located in Mauá, ABC region. With this project, Sabesp increased reclaimed water production thirteen-fold.  Loss reduction is also one of our core goals to overcome low water availability. Our Corporate Water Losses Reduction Program obtained an unprecedented funding of R$ 710 million, signed in February 2012 with the Japanese government. Although we still have not reached the expected loss rate, this investment will allow us to further promote

MESSAGE FROM THE CEO

the initiative and increase efficiency in the second quarter of 2013, as well as increasing loss reduction activities.  Regarding the sanitary drainage system, in 2012, we reached the second highest mark since 1998 regarding new connections completed, in addition to reaching the 77% collected sewage treatment rate. We have delivered 23 new STPs and began building an additional 38, which has put us one step closer towards universalizing the countryside sanitation, expected for 2014.  All of our 2012 achievements further reinforce our commitment towards universalizing sanitation services in regular areas in which we operate by the end of the decade, constantly based on environment preservation and sustainability standards.

Dilma Pena  Sabesp’s Chief Executive Officer

7

profile

GRI 2.1/2.2/2.4/2.5/2.6/2.7/2.8/4.8

fifth largest   sanitation company in the world Sabesp serves 27.7 million people 

Sabesp was incorporated in 1973, from the merger of several companies and under the guidelines of the National Sanitation Plan (Planasa). As a state-owned and mixed capital public company headquartered in the city of São Paulo, capital of the State of São Paulo, in Brazil, the company is controlled by the São Paulo State Government and regulated by public and private law standards and principles.   We are the largest sanitation company in the Americas and the fifth largest of the world in terms of population served, according to the 14th edition (2012-2013) of the Pinsent Masons Water Yearbook. We supply water to 27.7 million people (24.2 million directly and 3.5 million served in bulk) and collect the sewage generated by 21 million people. These figures indicate that Sabesp’s services cover approximately 67% of the urban population of the State of São Paulo.   GRI 2.3 Our structure is divided into five divisions, in addition to the CEO, two of which are operational, accommodating 17 business units distributed throughout the State. Sabesp operates 214 water treatment plants and 493 sewage treatment plants. Our water distribution system extends for 67,600 kilometers and the sewage distribution system covers 45,800 kilometers. The company currently has 15,019 employees, whose

8

productivity, measured in connections per employee, grew 67% in the last ten years. The company operates in 363 cities of the State of São Paulo, 193 of which rely on complete water and sewage service coverage. In addition, the company supplies bulk water to six other cities located in the São Paulo Metropolitan Region (RMSP), five of which also make use of sewage treatment services.  In three other cities of the State of São Paulo, Sabesp provides water and sewage services through partnerships with the following companies: Águas de Castilho S.A., Águas de Andradina S.A. and Saneaqua Mairinque S.A. In the city of Mogi Mirim (SP), also in partnership with Sesamm – Serviços de Saneamento de Mogi Mirim S.A., we are responsible for the modernization, implementation and management of the sewage treatment system.  Through partnerships with other companies, Sabesp created the Aquapolo Ambiental, which began operations in 2012 to produce, supply and trade reclaimed water for the Capuava Petrochemical Complex, and Attend Ambiental, whose purpose is to implement and operate a non-domestic wastewater treatment and sludge conditioning plant in RMSP, among other activities - the plant is expected to begin operations by September 2013. 

We also provide consulting services on rational use of water, commercial and operational management in Panama and Honduras, as well as state water and sewage concessionaires in Alagoas (Casal) and Espírito Santo (Cesan), promoting technology interchange within the sector.  Additionally, we are qualified to operate in the urban cleansing and drainage, solid waste handling and power markets, among other services, providing products and assessing rights and benefits directly or indirectly arising from its assets, operations and activities, both in Brazil and abroad.  Our mission is to "render sanitation service, contributing for a better life and environmental quality." Our future vision prescribes “to be recognized by 2018 as the company that has universalized water and sewage services, within its operating area, in a sustainable and competitive manner, with excellence in customer services.”  Our exclusively common shares are traded on the São Paulo Mercantile, Futures and Stock Exchange (BM&FBovespa) under ticker symbol SBSP3 and as American Depositary Receipts (Level III ADRs) on the New York Stock Exchange (NYSE), under ticker symbol SBS In 2012, Sabesp celebrated its tenth year listed on BM&FBovespa’s Novo Mercado tier and NYSE.  

www.sabesp.com.br/ rs2012/bolsany

67% of the urban population   in the state of são paulo

We are qualified to operate in the urban cleansing and drainage, solid waste handling and power markets, providing products and assessing rights   and benefits arising from its assets, operations and activities, both   in Brazil and abroad

panel of   indicators  2008 / 2012

customer service operational financial environmental social Customer Service Water service rate Trends to universal service (1)

99

Sewage collection service rate 83 82 81 80 79

2012 2011 2010 2009 2008

%

Resident population served by Sewage Collection 19,198

19,600

20,024

20,498

20,993

2008

2009

2010

2011

2012 [ thou inhabit. ]

%

Collected sewage treatment rate 77 76 75 74 72

2012 2011 2010 2009 2008

Number of cities with universal service (2)

%

Resident population served by water supply 23,162

2008

10

23,363

2009

23,625

2010

23,911

2011

24,249

2012 [ thou. inhabit. ]

110

125

141

146

193

2008

2009

2010

2011

2012

[ unit ]

Positive customer satisfaction perception (3) 2012 2011 2010 2009 2008

89 92 89 76 80

%

operational Water connections

Water metering ratio (6)

6,945

7,118

7,295

7,481

7,679

2008

2009

2010

2011

2012

[ thou. ]

99.97 99.97 99.97 99.97 99.98

2012 2011 2010 2009 2008

%

Sewage connections 5,336

5,520

5,718

5,921

6,128

2008

2009

2010

2011

2012

Produced water volume 2,853

2,845

2,952

2,992

3,059

2008

2009

2010

2011

2012

[ thou. ]

[ millions  of m3 ]

water system extension (4) 62,528

63,732

65,379

66,389

67,647

2008

2009

2010

2011

2012

sewage system extension

Retail water micro metered volume [ KM ]

(4)

41,312

42,896

44,279

45,073

45,778

2008

2009

2010

2011

2012

[ KM ]

WTPs - Water Treatment Plants 206

208

213

212

214

2008

2009

2010

2011

2012

[ unit ]

Wells (5) 1,085

1,106

1,093

1,102

1,079

2008

2009

2010

2011

2012

1,404

1,444

1,514

1,557

1,601

2008

2009

2010

2011

2012


Bulk water volume billed 285

288

293

297

298

2008

2009

2010

2011

2012


Retail water volume billed 1,596

1,630

1,699

1,747

1,796

2008

2009

2010

2011

2012


[ unit ] Sewage volume billed

STPs - Sewage Treatment Plants 464

475

490

490

493

2008

2009

2010

2011

2012

25.7 25.6 26 25.9 27.9

%

2009

1,486

1,535

2008

2009

2010

2011

2012


403

2010

16,649

15,103

15,330

14,896

15,019

2008

2009

2010

2011

2012

[ inhabit. ]

OPERATING PRODUCTIVITY

Water losses per connection

2008

1,434

NUMBER OF EMPLOYEES (7)

2012 2011 2010 2009 2008

400

1,373

[ unit ]

Water losses

434

1,330

395

393

2011

[ liters per connection 2012 a day ]

738

837

849

900

919

2008

2009

2010

2011

2012

[ connections / employee ]

11

panel of indicators 2008 / 2012

Financial     (8)

Indicators

unit

2012

2011

2010

2009

2008

Gross revenue

R$ million

11,409.3

10,544.9

9,786.6

9,085.2

8,296.4

Net revenue

R$ million

10,754.4

9,941.6

9,231

8,579.5

7,809.3

Adjusted EBITDA (9)

R$ million

3,605.2

3,213.3

3,222.5

2,727

2,865

Adjusted EBITDA Margin

% of net revenue

33.5

32.3

34.9

31.8

36.7

Adjusted EBITDA Margin w/o construction costs and revenues

% of net revenue

Operating income (10)

R$ million

Operating margin (10)

% of net revenue

42.9

41.1

44.7

41.2

46.3

2,845.3

2,354.4

2,672.2

2,120.3

2,121.3

26.5

23.7

28.9

24.7

27.2 862.9

Income (net profit/loss)

R$ million

1,911.9

1,223.4

1,630.4

1,507.7

Net margin (11)

% of net revenue

17.8

12.3

17.7

17.6

11

Net debt to Adjusted EBITDA

multiple

1.98

2

1.95

2.12

2.18

Net debt to shareholders' equity

%

Investment (12)

R$ million

61

61.1

64.8

68.6

85.1

2,535.6

2,440.2

2,194

2,059

1,734

2010

2009

2008

environmental    Indicators

unit

EN1 Materials used by weight or volume

Kg / m³ / Un.

EN2 Percentage of recycle materials

%

4.54

5.18

5.14

5.18

-

EN10 Percentage of water consumed in treatment in WTPs (13)

%

2.3

2

1.7

-

-

%

96.8

91.4

91.9

-

-

1,645.8

1,572.2

1,636.8

1,358.5

1,315.6

%

0.35

0.35

0.35

0.26

0.27

%

0.66

0.66

0.64

0.58

0.51

EN10 Percentage of water recov-

ered to wash water filters/decanters in WTPs (13)

EN21 Volume of reclaimed water supplied (14)

thou. m³

EN21 Percentage of reclaimed water sold

per sewage treated reclaimed in STPs (14)

EN21 Percentage of internally used reclaimed water

sold per sewage treated volume reclaimed in STPs (14)

EN21 Percentage of reclaimed water supplied on installed capacity

(14)

2012

2011

232,386,091 206,376,578 203,291,835 193,607,523

-

%

34.74

34.74

36.17

30.02

29.07

EN3 Total electricity consumption

Terajoules (TJ)

8,553

8,196

7,773

7,632

7,732

Electricity consumption/m3 of produced water

kWh/m³

0.65

0.64

0.61

0.63

0.65

Electricity consumption/m3 of treated sewage

kWh/m³

0.42

0.43

0.41

0.43

0.40

EN16 Direct and indirect greenhouse gas emissions (15)

t CO2 e

-

-

1,873,729

1,804,307

1,796,703

EN30 Total environmental protection expenditures and investments

R$ million

27,715

30,426

-

-

-

Recycled A4 paper per total of A4 paper used

%

26.4

25.7

19.6

17.5

15.5

Volume of A4 paper used per employee

sheets per   employee per year

3,682

3,711

3,352

3,311

2,846

Positive public perception of Sabesp’s environmental responsibility (3)

%

65

78

81

71

66

Positive public perception of employee engagement in environmental issues

%

-

-

51

51

44

Voluntarily planted seedlings

units

30,034

126,633

726,255

547,750

125,573

Number of recyclables collected by Sabesp 3Rs

t

372

286

101

130.9

77.4

EN6 Average consumption of fuel alcohol

liters/vehicle

2,532

2,529

2,232

2,174

1,724

EN6 Alcohol consumption over total fuels (16) No. of STPs and WTPs with implemented Environmental Management System (SGA)

%

50.1

32

48

46

34

units

65

65

65

26

4

No. of ISO 14001 certified STPs and WTPs

units

50

50

50

4

4

12

social frequency ratio of accidents w/ leave of absence (17)

Positive public perception of Sabesp’s social responsibility (3)

7.2

5.1

6.2

6.9

4.6

2008

2009

2010

2011

2012

[ accidents per  million worked  hours]

64 80 83 78 71

2012 2011 2010 2009 2008

%

Amount invested in internal social programs (18) 432

463

382

501

516 Positive public perception of employee   engagement in social issues

2008

2009

2010

2011

2012

0.5 5.0 4.1 5.4 6.8

2012 2011 2010 2009 2008

[ R$  Million ]

% 

49 47 41

2012 2011 2010 2009 2008

%

[ of net  revenue ]

Complaints registered in Procon amount invested in external   social and environmental programs 51

62

54

57

56

2008

2009

2010

2011

2012

2012 2011 2010 2009 2008

0.5 0.6 0.6 0.5 0.8

95

98

49

91

93

2008

2009

2010

2011

2012

[ unit ]

2012

[ position ]

[ R$  Million] Position in Procon ranking (19) 43a

% 

[ of net  revenue ]

45a 2008

2009

2010

2011

Notes: (1) 99% or thereafter. (2) Water service > 95%, sewage collection > 90%, and collected sewage treatment > 97%. Indicators may be adjusted due to projections established by Fundação Seade based on the 2010 Census. (3) Survey conducted in 2012 by Datamétrica Consultoria, Pesquisa e Telemarketing Ltda. (5,862 interviews in the entire operating base with a 1.3% margin of error and 95% confidence interval). (4) Includes watermains, sewage mains, interceptors and outfalls. (5) The volume produced in deep wells is equivalent to roughly 6% of total water supplied. (6) Connections with water meter / total connections. (7) Number of own employees. Does not include employees assigned to other entities. (8) Consolidated. (9) Earnings before interest, taxes, depreciation and amortization. (10) Does not include financial income and costs. (11) Adjustment in 2008 resulting from the reissue of financial statements, which affected operating margin and net margin. (12) Does not include financial obligations assumed under program contracts (R$ 253 million, R$ 18 million, R$ 63 million, R$ 139 million and R$ 155 million in 2008, 2009, 2010, 2011 and 2012, respectively). (13) Considers only STPs in the RMSP integrated system. Part of the water from plants is used to wash filters/decanters, constituting a drinking water "water footprint". Four of the system’s eight STPs recover washing water: Guaraú, Rodolfo José da Costa e Silva, Taiaçupeba and Rio Grande. (14) Referring to the ABC, Barueri, Jesus Netto, Parque Novo Mundo and São Miguel WTPs, which have facilities to reclaim water. Water supplied corresponds to the water sold and internally consumed in WTPs (e.g. pump sealing). Capacity is the facilities' nominal capacity. (15) The 2008 inventory was recalculated based on the 2009 (base year) and 2010 inventory methodology. Among the changes are the use of MCFs (methane conversion factors) specific to calculate the emissions of some WTPs, and the separation of neutral emissions (CO2 emissions of biofuels) in inventory calculation, which were not accounted in the latter’s results. (16) Owned and leased fleet light vehicles considered; alcohol and gasoline. (17) Excludes commuting accidents and occupational diseases. (18) Includes profit sharing. (19) When not reported, it means that we are no longer among the 50 most complained against companies in Procon’s ranking.

13

THE SEARCH FOR EFFICIENCY IN THE NEW REGULATED ENVIRONMENT

14

In addition to being essential to preserve life, water is the basic element of many productive process. Thus, water resource management has gained particular relevance over the last few years, with the purpose of increasing the efficiency regarding the use of such scarce resource.

Experts believe that the global water supply and demand dynamics may generate several development opportunities to companies involved in such chain of value, mainly due to factors such as the shortage of water, population growth, urbanization, industrial development, food and power safety, and social pressure.  Despite being considered as opportunities, these factors may represent major challenges for the segment when analyzed under a financial perspective. The total investment required to expand Brazilian water and sewage services is estimated at approximately R$ 262.7 billion by 2030, according to the Ministry of Cities.   Efficient management mitigates risks associated to shortage, reducing the demand and the need for investments.      

FUTURE OUTLOOK AND STRATEGY    Based on sustainable development principles and in line with the environmental and socioeconomic policies of its controlling shareholder, while it executes its basic sanitation universalizing strategy within the State of São Paulo, Sabesp also participates in major public programs designed to promote quality of life and preserve the environment. 

Concerned with issues related to water shortage, the company develops and implements loss control, rational use incentive and water reclaiming programs, in addition to encouraging technological production in order to promote efficient service expansion, also considering reasonable taxing and appropriation of social gains.  Management is further improved in order to reach such efficiency. Electrical power is one of the most relevant resources, both for our business and our services' consumers. Several inductive electrical power expense reduction and efficient consumption initiatives have been developed under such purpose. An example is the São Lourenço Production System (SPSL) for 20 hours of operation, preventing operation in higher power fee periods. Despite such efforts, the current volume of power consumed per cubic meter produced increased by 1.4% in 2012. Along with the Alto Tietê municipalities, the company is currently assessing producing power from solid waste handling activities, which can be applied in its own productive processes and traded.  Our services focus on covering specific technical and operational requirements of each region. Sabesp is constantly searching for specific solutions that meet all sanitary conditions required. Social responsibility is also an inherent element in all of Sabesp’s activities. Based on local characteristics, the company develops the communities in which it operates by engaging its target audience, heavily contributing towards shaping citizens of the future.  Preserving the environment is part of our everyday routines, which is why we constantly strive to enhance control over our operations in order to maintain sustainable growth. By improving our management processes, we mitigate impacts caused by our business. We believe that educational initiatives raise awareness regarding the need to preserve and protect nature.

COMPANHIA DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO / sabesp

15

THE SEARCH FOR EFFICIENCY IN THE NEW REGULATED ENVIRONMENT

GOAL BALANCE 

New water  connections:  highest number  since 2000

  We met five of the six performance goals set for 2012, which benchmarked the profit sharing bonuses granted to our employees through the Profit Sharing Plan (PPR).  Water supply remains in a level we might consider as universal in our area of operation. New connections of this service follow the organic growth in the areas served by us and our business, reaching the largest growth since 2000 in 2012.  Sewage collection and treatment activities are still on track. In 2012, we reached the second highest mark since 1998 regarding new sewage connections completed, in addition to reaching the 77% collected sewage treatment rate. 

We reached the important goal of publishing the international bidding tender for the PublicPrivate Partnership (PPP) to implement the São Lourenço Production System. The new system will increase the water supply to RMSP and ensure reliable supply. Another important achievement was the Adjusted EBITDA margin, which reached 33.5%, exceeding the estimated percentage.  The loss rate goal was not reached. Our rate is currently 25.7%, and the established goal was 25.2%. In 2013, however, with the investment of R$ 710 million from Jica (Japan International Cooperation Agency), this rate is expected to improve. The company was also unable to maintain the customer satisfaction rate at 92%, even though such rate only dropped 3 percentage points below initial estimates.  

Attained 2012 and goals 2012-2020 (1)  Attained

2012

goals 2012-2020

2012

2013

2014

2015

2016

2020

Trends to universal service (2)

Water supply

Sewage collection (%)

83

83

84

85

86

87

95

Collected sewage treatment (%)

77

77

78

80

82

86

95

New water connections (thou)

212.8

175

175

176

177

172

644 (3)

New sewage connections (thou)

240.7

217

217

242

246

243

928 (3)

25.7

25.2

25.2

23.4

22.7

21.9

19

Water revenue loss (%)

 (1) Profit Sharing Plan 2012 and 2013 Goals. (2) 99% or thereafter. (3) 2017/2020 accrued goal

16 2012 sustainability report

Indicators

Goal Attained 

32.4%

33.5% 

92%

89% 

Number of new water connections

175 thou

212.8 thou 

Number of new sewage connections

217 thou

240.7 thou 

25.2%

25.7% 

Collected sewage treatment rate

77%

77% 

São Lourenço Production System

publish bidding process

Adjusted EBITDA margin (1)

Customer satisfaction rate

Water revenue loss rate

(1)

published on 11/08/2012

Earnings before interest, taxes, depreciation and amortization.

17

RELIABLE WATER SUPPLY IN AN ENVIRONMENT OF WATER SHORTAGE

18

Sabesp operates in the Brazilian region with highest

In 2012, we maintained the expansion rate of water supply services. A total of 212,800 new connections were performed. This is the company’s highest number of connections since 2000, representing an increase of 2.4% compared to 2011. Such expansion allowed us to maintain universal water supply within legalized areas of the cities in which we operate, adequately accompanying organic growth. A total of 59% of such new connections were made in the São Paulo Metropolitan Region (RMSP). Between 2013 and 2020, our business plan encompasses 1.3 million new connections.   It is not a widely known fact that we deal with water shortage scenarios similar to arid regions in our main operating markets. In

RMSP, which encompasses around 20 million people, irrigated by the Alto Tietê hydrographic basin, water availability is approximately 200 cubic meters per inhabitant/year – one cubic meter corresponds to one thousand liters of water. The UN considers any level below 1,500 m3/inhabitant/year to be "critical". In addition, fast-paced urbanization and disorganized metropolitan occupation collaborated to reducing both the quality and quantity of water available in watersheds.  This is not a rhetorical threat. Until the mid 1990s, several Great São Paulo areas were still included in the supply rotation system: 5 million people were affected. The situation was reversed with the Metropolitan Water Program, implemented by the company, which included reserve increase, new watermains and pumping stations. The rotation system was eliminated in 1998 and all legalized RMSP areas are currently supplied. Nonetheless, the program’s investments, estimated at R$ 2.7 billion, are still on track, with the purpose of rendering greater safety and quality of the RMSP integrated system, leveraging water production and distribution capacity and enhancing supply systems. By 2012, a total of R$ 1.3 billion had been invested in the program, R$ 95.2 million this year alone.  Considering such efforts, water offer has been outgrowing water demand in the Great São Paulo area in the last few decades: between 1990 and 2012, while the metropolitan population group grew by approximately 30%, water production increased by 41% (from 49 m3/second to the current 70 m³/second).

30%

41%

increased metropolitan population

water production increase  

population density: the State of São Paulo. A total of 24.2 million  customers are directly served with treated water, which accounts for approximately 60% of the State’s urban population. We also provide water in bulk to six cities, covering 3.5 million residents. Ensuring reliable supply to these people – who live in the Greater São Paulo countryside or coast, under extremely diversified conditions – has been a constant challenge faced by the company.

Metropolitan Water Program: reliable supply – 1990 to 2012

from 49 m³/second to 70 m³/second


19


1.5 million people will be benefited by the São Lourenço system


We currently have 20 dams with untreated water, 34,800 kilometers of watermains and systems, and 405 reservoirs with total capacity of 2 million m³, comprising eight major RMSP production systems.  The scenario of shortness faced in important operating areas - RMSP accounts for approximately 70% of our gross revenue, including construction revenues - forces us to double our efforts in four major fronts in order to ensure reliable water supply to our customers: collecting water in farther watersheds; increasing production capacity; investing in new water reclaiming technologies; raising population awareness regarding the need to reduce water consumption.  In November, 2012 we launched the bidding process to implement the São Lourenço Production System (SPSL), which, upon completion, will increase RMSP water offer by 4.7 m³/s – which corresponds to 6% of current production. The water used at SPSL will be collected from the Cachoeira do França dam, in the city of Ibiúna, transported 83 kilometers into treatment, reserve and distribution points – we already collect waters at a distance of 80 kilometers to supply the metropolis, in the Ribeirão do Carmo dam, in Salesópolis.  A Public-Private Partnership (PPP) will be responsible for SPSL investments. The private partner will be responsible for effecting all necessary investments, estimated at R$ 1.6 billion. The bidding process is currently ongoing; PPP agreements are expected to be signed by the second half of 2013 and the SPSL is expected to begin operations by April 2018.  Approximately 1.5 million people will be directly benefited by the new system, within the cities of Barueri, Carapicuíba, Cotia, Itapevi, Jandira and Vargem Grande Paulista, all of which are located in the far west of the Great São Paulo area. However, since Sabesp’s RMSP water supply system is completely integrated, such addition will indirectly cover the entire population served by the company in the metropolitan area. 

The SPSL was also designed to meet sustainability requirements, with greater power savings and efficiency. The system will operate 20 hours a day, avoiding operations in high power fee periods. Also aiming at mitigating eventual environmental impacts, Sabesp also directed the implementation of the watermain between collection and the treatment plant throughout side roads, detouring from private natural protection reserves and native forests.  In addition to the search for new water resources, the RMSP water intake, reserve and production system expansion works are still on track. In 2012, we performed interventions in the Capital city (mainly improvements that benefited 120,000 people in the Jardim Ângela region); in Embu-Guaçu (implementation of an WTP with capacity of 152 l/s); in Barueri, Itapevi and Jandira (benefiting 300,000 people with our new reservoir and the Baixo Cotia WTP pumping station); Osasco and São Bernardo do Campo. By 2014, we will increase the Alto da Boa Vista and Guaraú WTPs' production capacity by 5 m³/s, as well as add 446,000 m³ to the reserve volume and approximately 1,500 kilometers of networks to the RMSP water intake and distribution system.  Similarly to the Great São Paulo area, the Baixada Santista Metropolitan Region also faces significant water supply challenges. Watersheds located in the Serra do Mar are limited, hindering especially the supply to the floating population at the coast during the summer – when all nine municipalities house up to 3 million people, almost doubling the number of fixed residents.  In order to overcome this scenario, in 2012, Sabesp implemented two major ventures built to ensure reliable water supply to the Baixada Santista: in December, the new Jurubatuba WTP, in Guarujá, and the Mambu-Branco Production System, installed in Itanhaém, initiated its operations, which also benefited residents of Mongaguá, Peruíbe, Praia Grande and the continental area of São Vicente. These facilities have a combined capacity to treat 3,600 liters of waters per second. These works

m3 / month x 1,000

are part of the Água no Litoral [Water for the Coast] program, which has already invested R$ 569.1 million of an estimated total of R$ 1.1 billion. In 2012, the program’s investments totaled R$ 129.3 million.  Beyond the RMSP and Baixada Santista, in 2012 we also eliminated critical water supply issues in several countryside cities, such as Assis, Avaré, Botucatu, Buritizal, Itapetininga, Itapeva, Jarinu, Mococa, Presidente Prudente and Restinga. In addition to structural projects, the company has adopted contingency plans that encompass improvements in operational systems, increased staff during high-demand periods, and communication initiatives to raise awareness within the general population.  Focused particularly in high social vulnerability regions, located in areas far from the main countryside cities, Sabesp implemented the Água É Vida [Water is Life] program. Launched in late 2011, based on the company’s universal service policy, the program aims at providing water supply and sanitary drainage to 41 areas located in the Alto Paranapanema and Vale do Ribeira regions. Early initiatives took place in 2012, mainly related to the drilling of wells that will supply water to 12 communities by late 2013. 

The Água É Vida program also encompasses sewage drainage services for such communities through a simplified system (Individual Sanitary Units - USIs), comprised of a grease trap, septic tank, anaerobic filter and/or gutter, which reduces necessary investments to access services, as well as complying with all sanitary requirements. The municipalities shall be responsible for implementing the USIs, covering 11 locations throughout 2013.

Reclaimed water    Expanding the existing operational structure and searching for new sources to increase water supply, are necessary, but not sufficient to overcome the water shortage scenario currently faced by the company. Especially in light of increasing risks associated to water supply, such as exposure to longer drought periods. Thus, Sabesp has been attempting to develop actions and technologies aimed at leveraging the reuse of wastewater from sewage treatment plants for industrial purposes, equipment cooling, and other non-drinking applications.

3,000 2,500 2,000 1,500 1,000

Reclaimed water volume supplied

500 0 2007

2008

2009

2010

2011

2012

2012

2013

2014

2015

2016

2012 with Aquapolo estimated


21


Rational water use 

Average daily consumption per capita / m3

Similarly, one of the company’s main achievements in 2012 was the effective operation of the Aquapolo Ambiental, a partnership between Sabesp with Foz do Brasil (Grupo Odebrecht), comprising a Special Purpose Entity (SPE). The Aquapolo will have capacity to supply up to one thousand liters per second to the Capuava Petrochemical Complex, in the ABC region. (learn more at sabesp.com.br/rs2012)  With the Aquapolo, Sabesp increased reclaimed water production thirteen-fold. We are currently able to supply 395,000 m³/month to the ABC, Barueri, Parque Novo Mundo, São Miguel Paulista and Jesus Neto STPs. However, we currently supply only 138,000 m3/month, mainly due to distribution logistics issues, initial stages of client prospecting activities, and the need to perfect the productive process, since the reclaimed water produced in our treatment plants can only be used for specific applications. It is important to note that, in 2012, we began an assessment to implement a reclaimed WTP at the Parque Novo Mundo STP, with the purpose of supplying reclaimed water to textile factories.

 

Solely investing in the better use of our watersheds is not enough. It is also necessary to work with our customers, raising awareness regarding the difficulties inherent to supplying quality water in sufficient volume in order to prevent lack of supply, promoting conscious consumption. Therefore, the promotion of rational water use is also part of our strategy, and it has already shown positive results: in the last ten years, loss prevention reduced the Great São Paulo area’s consumption per capita by 11%.  One of the main initiatives within such strategy is Pura (Rational Water Use Program), which focuses on reducing water consumption in public buildings. Currently, 2,400 schools, health care units, hospitals and even prison facilities, such as the Santana women’s penitentiary, in the north side of the Capital, are targeted for education and equipment replacement activities. With the resources saved by Pura, we were able to maintain a sufficient volume of water to supply a population of 26,000 people without having to use new watersheds.

17.5 17

17.08

16.5

16.06

16

15.35

15.5

15.32 14.92

15 14.89

14.5

15.09

14.98 14.66

14.56

14

14.65 14.30

13.5 13

Evolution of water consumption in the São Paulo Metropolitan Region Source: Metropolitan Division-Sabesp

12.5 2001

2002


2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2,170 1,726

2,471

819

2,471

85 2008

properties served by Pura

2009

2010

EN 26 Another initiative favoring supply reliability is the Water Losses Reduction Corporate Program. Launched in 2009, the program received investments totaling R$ 328 million in 2012, and an additional R$ 4.5 billion is expected between 2013 and the end of the decade, with resources from Jica (Japan International Cooperation Agency), Caixa Econômica Federal, and BNDES, in addition to own resources. The program includes an unprecedented funding of R$ 710 million, signed in February 2012 with the Japanese government – global reference in loss control technologies. Jica’s investments will cover the replacement of 840,000 branches, 670 kilometers of water systems and 1.5 million water meters. The program will also search for currently invisible leaks throughout 155,000 kilometers of water systems through a period of two years – which corresponds to two-times the extension of the water distribution system currently operated by the company, since the most critical lengths will be analyzed more than once. Initiatives are scheduled to begin in the second half of 2013.  Our revenue loss rate is currently 25.7%, practically stabilized compared to 2011, when it reached 25.6%. The 2012 goal was to reach

2011

2012

25.2%; however, this still has not been possible due to several factors, namely: i) contractual issues in loss prevention initiatives implemented in the Baixada Santista, which is currently being solved with new contracts; ii) difficulties in replacing branches, especially in areas with high urban density; iii) reduced uncertainty in macro-measured volumes, with the installation of macro-meters in the Água Guaraú Treatment Plant output in January 2012.  The indicator comprises actual losses (leaks) and apparent losses, consisting of illegal connections and undermeasurement. The percentage indicates that 392 liters/day are not measured by branch.   The company’s long-term goal for the program was revised and, upon the beginning of water system maintenance and business services arising from the contract entered with Jica in 2012, we expect loss prevention actions to increase, incorporating best practices in order to reach the highest level of quality in services rendered. We expect to reduce revenue losses to 19% by the end of this decade – in Brazil, the current rate is 35.9%. The company has already invested R$ 1 billion in the program.  

reduced revenue losses to 19% by the end of the decade

Learn more at   sabesp.com.br/rs2012


23

EXPANSION OF THE SANITARY DRAINAGE SYSTEM AND RECLAIM   OF WATER RESOURCES

24

Society’s demand for sanitary drainage services is increasingly higher, as well as that related to the recovery of rivers, brooks and other water resources. Such demand has been particularly heightened in countries such as Brazil, where currently less than half of the population is benefited with sewage collection services, and only 38% of the generated sewage receives some kind of treatment. Extremely aware of its responsibility towards improving the lives of the São Paulo State population and preserving the environment, Sabesp has been operating in a structured manner,  in order to universalize basic sanitation services within its operating area by the end of the decade.

193 cities  completely covered with water, sewage collection and treatment services. Total of 47 cities received universal coverage throughout 2012

It is important to note that the expansion of drainage systems only recently became a priority in Brazilian public sanitation policies. This occurred initially because the operations of service providers and governments in general was directed to solve water supply difficulties, which was an issue deemed much more pressing by the population. After such issue was addressed and balanced, despite completely solved, attention turned to the need to collect and treat sewage, preventing the wastewater generated by the population from contaminating water resources.  In line with such needs, since the early 1990s, Sabesp implemented a strategy defined and organized towards expanding sanitary drainage services in all 363 cities in which we operate. We have implemented a long-term investment plan and, considering

what we have already achieved, we plan to reach universal sewage collection and treatment services in the main countryside cities by late 2014.   A total of 193 cities are currently supplied with complete water, sewage collection and treatment services by the company within the State of São Paulo. Universal services have been implemented in an additional 47 cities throughout 2012.  The company currently focuses on increasing the number of sewage treatment plants (STPs) throughout the state, eliminating in natura discharges occurring in cities operated by the company. In 2012, we concluded construction works of 23 new STPs, which improved the life and water quality of rivers such as Alambari, Barreiro de Baixo, Guareí, Jundiaí, Pardo, Pirapora, Ribeira do Iguape, Tietê and Verde. An additional 38 units are being built in inland São Paulo, expected to be concluded between this year and the next.  The progress of initiatives to improve water quality conditions was recognized in reports published by the São Paulo State Environmental Company (Cetersb) and National Water Agency (ANA), disclosed last year. In the Outlook of Water Resources in Brazil - 2012 Report, ANA states: "Among points that presented increase IQA (Water Quality Indicator, particularly sensitive to contamination due to sewage disposal), the most relevant were those located in São Paulo, one of the States that most invested in sanitation in the past decade. Several rivers were recovered in the Tietê River Basin (Sorocaba, Jundiaí, Jacaré-Guaçu, and Jacaré Pepira Rivers) and the Paraíba do Sul, Paranapanema and Grande river basins."  In the Surface Water Quality in the State of São Paulo document, related to 2011, the most recent version available, Cetesb states: “Several sanitary drainage system improvement initiatives became evident in the remaining load (organic) evolution (that is, which will be discharged in receiving water resources), recording a decrease of approximately 15% between 2006 and 2011.”


25

Load (t. DBO/day)

EXPANSION OF THE SANITARY DRAINAGE SYSTEM AND RECLAIM OF WATER RESOURCES

1,500 1,450 1,400 1,350 1,300

reduction of the remaining load in the State of São Paulo – 2006 to 2011

1,250

Source: Surface Water Quality in the State of São Paulo – 2011, Cetesb

1,050

1,200 1,150 1,100

1,000 2006

2007

2008

The percentage represents a decrease of 200 tons/day discharged in rivers, brooks and other watersheds of the State’s region.   After the São Paulo countryside, our strategic planning establishes a universal sewage collection and treatment goal in legalized areas within the São Paulo and Baixada Santista metropolitan regions and the Northern Coast to be met by the end of the decade, in compliance with the company’s vision. After these priorities, the company will exclusively consider areas of the São Paulo capital city that are currently irregularly and illegally occupied, under a service schedule extending through 2025. Such actions depend on additional initiatives from local public agencies, namely related to reurbanization and housing projects for families currently living in valleys, lowlands and riverbanks – estimates indicate that approximately 20% of the São Paulo city’s territory presents some kind of irregularity.   In 2012, we have kept a steady pace in sewage collection service expansion activities. A total of 240,700 new connections were performed in the year. This is the second highest mark since 1998 and only 2.3% below the results


2009

2010

2011

reached in 2011. This increased the sewage collection service rate in our operating area to 83%: this service is currently available to 21 million people. The collected sewage treatment rate reached 77%, covering 15.4 million customers. Throughout all 363 cities where Sabesp operates, we are responsible for operating and maintaining 493 sewage treatment plants, nine submarine outfalls, and approximately 45,800 kilometers of sewage collection lines, trunk sewers, interceptors and outfalls.  Between 2013 and 2020, our business plan encompasses 1.9 million new connections. For such, our sewage system expansion initiatives are organized around four structural programs, namely: Tietê, Córrego Limpo e Vida Nova projects, in RMSP, and the Onda Limpa project, in the Baixada Santista and North Coast. Sabesp’s investments between 2013 and 2015 in broadening sewage collection and treatment systems totals R$ 4.1 billion. Additionally, we are participating in a São Paulo State Government program, launched in 2011, focused on subsidizing the connection of low-income family homes to the public sewage system, mainly with state

Sabesp currently has five major sewage treatment  plants  in RMSP, capable of processing  up to 18,000 liters  per second

Treasury resources: Se Liga na Rede program (enacted by Law no. 14.687/12 and governed by Decree 58.208/12 under the name Pró-Conexão Program and is being disseminated under the “Se Liga na Rede” concept, which will be the name adopted in this report). The Projeto Tietê remains the company’s main initiative towards expanding sanitary drainage and improving watersheds, especially the Tietê River, within the Great São Paulo area. In 2012, we completed 21 years of initiatives, implemented upon a widespread mobilization of the metropolitan population, including participation in civil society organizations and communication channels. We are currently implementing the third stage of works, destined to leverage sewage collection coverage in RMSP, from 84% to 87%, and the collected sewage treatment rate from 70% to 84%.  Under such goal, a total of 564 program projects throughout 25 cities are currently under execution or contracting stage: in 2012, we began intervention activities in Cajamar, Cotia, Embu das Artes, Embu-Guaçu and Rio Grande da Serra. Investments within this stage will reach US$ 2 billion, funded by the Inter-American Development Bank (BID), Caixa Econômica Federal and BNDES. Upon completion of the current works stage by 2016, over 1.5 million people will receive collection services and 3 million new residents will be benefited with sewage treatment services.  Throughout these two decades, the Projeto Tietê was primarily focused on expanding the installed treatment capacity within the Great São Paulo area, in order to efficiently service the integrated metropolitan system. We currently have five major sewage treatment plants (STPs) capable of processing up to 18,000 liters per second – which is four times greater than in the early 1990s. Subsequently, we structured sewage disposal and collection system expansion projects. Since then, approximately 3,500 kilometers of pipeline, including collection lines, trunk sewers and interceptors, were installed.  The results of such actions are already evident in some inland São Paulo cities.

Before the Projeto Tietê, these areas were also affected by the pollution generated mainly by industries and residents of the Great São Paulo area. This problem, however, has recently been eliminated. The pollution stain, which previously reached the Barra Bonita dam lake, has receded approximately 160 kilometers, until the outskirts of the city of Salto, much closer to the RMSP. By the end of the third phase of the program, we estimate that metropolitan residents will be able to clearly notice river improvements, especially the significant reduction of the unpleasant odor generated.  Sabesp invested R$ 698 million in the third program stage; R$ 328 million in 2012 alone. Among the Tietê Project’s main activities concluded in 2012 is the implementation of the Ipiranga trunk sewer, whose extension of 15.5 kilometers increased the transportation of sewage collected in the Ipiranga brook basin (Ipiranga, Saúde, Bosque da Saúde, Água Funda, Vila Gumercindo and Chácara Inglesa districts, among others), benefiting 270,000 residents in the Capital city.   We also began implementing the Pinheiros interceptor, with an extension of 2.2 kilometers. This element completes the intercepting and removal structure of sewage generated in the Pinheiros riverbank area. An appropriate piping system will be implemented in both sides of the entire river, transporting wastes to the Barueri STP, at approximately 60 kilometers. We have also concluded the compact Guatambu STP, with capacity for 32 l/s, in Itaquaquecetuba.  Also regarding the elimination of in natura sewage disposal generated in areas served by Sabesp into RMSP watersheds, the company is currently structuring the fourth and final stage of the Tietê Project, expected to be implemented between 2014 and 2018, with estimated investments totaling US$ 2 billion. For such, the company has undertaken to receive open credit lines from the federal government, as well as international funding sources, similarly to the program’s previous stages. 


27


In the city of São Paulo, water resource recovering and drainage expansion activities were further supported by the Córrego Limpo [Clean Brook] program. This initiative was implemented in partnership with the city hall, involving operational and financial resources to recover brooks, prevent illegal sewage discharge in its waters, cleaning its banks and preventing them from being illegally occupied, and relocating families to new houses in more appropriate areas.   The program exists since 2007 and reached the mark of 116 brooks cleaned last December. The third project phase’s goal was to clean 45 city brooks last year; 19 were cleaned by December and 33 will be decontaminated by the first half of 2013, benefiting a total of 390,000 people. Program investments reached approximately R$ 710.3 million by 2012, R$ 109.6 million of which were injected by Sabesp. In January 2013, considering major changes to the city’s administration, Sabesp and the São Paulo City Hall established an action plan regarding the Córrego Limpo program’s activities. Under this context, the company believes that it is possible to focus efforts and continue to efficiently decontaminate the Pinheiros river and Mandaqui, Tiquatira, Pirituba, Verde and Ipiranga brooks basins.   The expansion of the Great São Paulo area urban pollution perimeter, which occurred in an accelerated and unorganized fashion, excessively advanced over areas that are extremely important for the company; specifically the Billings and Guarapiranga dam watershed banks. Therefore, one of our structural programs aims at recovering the water quality in some of these regions: the Vida Nova/Mananciais program covers interventions in 43 slums and precarious allotments located in both sub-basins. By 2015, when the program is expected to be concluded, 58,000 families will have been benefited.  The São Paulo City Hall is responsible for executing the Vida Nova/Mananciais project’s


urbanization. Sabesp will invest resources in the implementation of an adequate infrastructure to collect sewage, preventing wastes from being discharged in springs. The company invests R$ 355 million in the program, which encompasses a total investment of R$ 1.3 billion, with resources also arising from the Federal government, State Government, City Administration, State Housing Authority, and the World Bank. R$ 37.3 million were invested in 2012, from the total of R$ 81.7 million already covered in this initiative.   In addition to the Vida Nova/Mananciais project, the Guarapiranga dam protection and preservation activities are further reinforced by the Nossa Guarapiranga [Our Guarapiranga] program. Organized by Sabesp, the program was implemented in 2012 and now relies on ten boats to collect residues retained in 11 barriers – screens located in the outputs of the main brooks connected to the dam, retaining garbage carried by the waters – and a boat to transport the collected waste to adequate landfills.   The program’s initial target was to collect 20 cubit meters of residues per day, thus improving the environmental quality of one of the main watersheds that supplies RMSP. However, the average volume collected was below the target, mainly due to severe droughts that hindered the teams' access to collection sites and reduced the amount of residues carried in brooks. In 2012, we collected approximately 4,400 cubic meters of residues, which would have otherwise been accumulated in the dam riverbed. We retrieved an average of one garbage truck of residues per day. Investments totaled R$ 12.2 million.  In addition to the São Paulo Metropolitan Region and countryside cities, our investment plan also targets providing universal drainage services in Baixada Santista and North Coast by 2016, through the Onda Limpa [Clean Wave] program. Initiated in 2007, interventions focus mainly on nine Baixada Santista cities, where

www.sabesp.com.br/rs2012/ecobarreiras

Nossa Guarapiranga

4,400   cubic meters   of residues retained  R$ 12.2 million   invested

71%

2012

53%

100%

treated sewage rate in Baixada Santista

sewage collection rate in Baixada Santista

nine treatment stations were built, with capacity to process 8,300 l/s of sewage. As obras já foram capazes de elevar o percentual de atendimento com coleta de esgotos na região de 53% para 71% e o índice de esgotos tratados de 96% para 100%. In addition to improved health conditions, Sabesp’s activities funded by Jica and BNDES resources provide benefits for the bothing conditions of all 82 beaches of the region, promoting economic activities, tourism and job/ income generation in one of the fastest-growing regions of the country. A total of R$ 1.7 billion has already been invested in Onda Limpa, R$ 135.7 million in 2012 alone.  Since 2011, when the collection and treatment system’s main works were concluded, the company has focused on increasing the number of Baixada Santista households connected to the public sewage system. Out of a total of 123,000 connections expected, 79,000 have already been concluded; 15,800 in 2012. In 2013, Sabesp expects to begin linear sewage works that will expand the collection system by over 250 kilometers, including a trunk sewer and 27 new pumping stations. However, this has shown to be a significant problem in seaside regions: since many of the properties are used for seasonal occupation, convincing its proprietors of connecting them to the public sanitation system is a greater challenge – despite the fact that some cities have public laws requiring such connection. In addition to operating in this front, Sabesp is currently developing the program’s second stage, expected to be implemented between 2015 and 2020, in order to reach universal sanitation services throughout all of Baixada Santista.  The Onda Limpa program also encompasses actions in the North Coast, where the purpose is to raise sewage treatment and collection rates to 85% by 2016 – previously 36% in 2008 and currently 50% – serving 600,000 people, including residents and tourists, especially during the Summer. Total program investments

2007

96%

Onda Limpa

R$ 1.7 billion   invested in Baixada Santista  R$ 135.7 million   in 2012 R$ 125.9 million   invested in the North Coast  R$ 24.3 million   in 2012


29


www.sabesp.com.br/rs2012/seliganarede

Se Liga na Rede

are estimated at R$ 500 million by 2018. A total of R$ 125.9 million has already been invested (R$ 24.3 million in 2012, including resources from Sabesp, BNDES, FGTS, and Caixa. Last year, the sanitary drainage systems in the Rio do Ouro, Pontal Santa Marina, Jaraguá and Travessão districts, as well as the Praia do Pinto and Ponta Azeda, in Ilhabela, were concluded.   The North Coast has specific characteristics that hinder such service: its territorial occupation is widely sparse, scattered around dozens of kilometers of Atlantic coast, and settled in humid and sandy terrains. Such characteristics impose another challenge to the company, which is currently assessing the implementation of a Public-Private Partnership to complete the region’s sanitation structure by the end of the decade.  In order to expand water resource recovery and drainage systems, in addition to a massive investment program, Sabesp has also operated in two fronts with the population: increasing the number of households connected to the existing public sewage system, and raising citizens’ awareness regarding the so-called "diffused pollution" (i.e. people littering the streets), which generates additional operating costs and poses enormous setbacks to sewage collection and treatment services rendered by the company.  In late 2011, the São Paulo State Government launched a program to overcome the problem regarding households which, despite available public collection systems, are not connected to Sabesp’s drainage system. The Se Liga na Rede aims at serving 192,000 households of families with income of up to three minimum wages throughout an eightyear period. Connection installation costs will be entirely covered by the government (80%) and Sabesp (20%). A total of R$ 349.5 million will be invested in the period.  During its first year, the program performed approximately 700 connections,


The sewage collection expansion arising from the Se Liga na Rede program will contribute to social inclusion, quality of life improvement, recover of rivers, brooks and water resources, and preserving watersheds

192,000

  households will be serviced within an eight-year period

20% paid by Sabesp

349.5  

R$ million invested

80% paid by the   government

below early estimates, covering important areas to preserve our watersheds, such as the southern region of the Great São Paulo area, next to the Billings dam. One of the reasons that help explain the 2012 result is the venture’s unprecedented nature: this is the first time Sabesp operates directly inside its customers’ homes. Initial experiences have been useful to adjust our teams' approach, narrowing bonds with the community served.

Diffused pollution: social engagement    Even if Sabesp employs its very best efforts, the company will not be able to solve the severe water recovery, watershed quality, and river, brook and water resource preservation issues by itself. The reason is simple: sanitation is the basic condition for society to reach such achievement, but it is not enough by itself. A considerable portion of the responsibility befalls the public power, especially the citizens. We are all part of the solution to overcome this challenge.  An important percentage of wastes that currently reach rivers, brooks and water resources stems from the so-called "diffuse pollution". This covers everything from candy wrappers and cigarette butts inadvertently littered in streets, the soot from cars and pet feces. Deficient urban drainage and garbage collection systems also further aggravate this scenario.   This issue is particularly troubling in the Great São Paulo area for at least two reasons: the volume of residues generates on a daily basis by a population of 20 million people; and the hydrographic conditions of the Alto Tietê

basin. When the Tietê River passes through the RMSP, it is still very close to its spring, located at less than 60 kilometers, in the city of Salesópolis. This means that, at this point, it still presents a very low flow, generating an extremely low water volume compared to the expressive urban clustering of the region. This factor severely hinders the dispersion of pollutants and the natural regeneration of river waters – according to Cetesb, the Alto Tietê basin receives 53% of the remaining organic load discharged in water resources of the State of São Paulo.  Within this scenario, the Great São Paulo population’s carelessness and bad habits regarding the need to protect the environment further prevent us from reaching better results. In this sense, awareness initiatives and campaigns have been paramount to change the culture and habits of citizens, engaging them in efforts to preserve our natural resources, particularly our water resources. For this reason, in addition to sanitary drainage plant and system expansion activities, Sabesp also conducts associated activities to protect its most valuable resources: watersheds and water resources.   For example, we have developed initiatives to prevent the discharging of pollutants in the sewage system, which affect the public drainage system and may contaminate the water, such as used kitchen oil – a single liter of this product in the water system can compromise the quality of 25,000 liters of water. In 2012, through the Prol (Kitchen Oil Recycling Program), organized in partnership with the Cargill kitchen oil manufacturer, we were able to reuse 1,535 liters of oil collected in the company’s service units. This product can be transformed into biofuel, soap or glass putty, for example. Due to the success of such partnership, we integrated an initiative from the São Paulo State Government in 2011, along with Cargill, to double kitchen oil collection points throughout the State by 2016.  

Learn more at   sabesp.com.br/rs2012


31

STPs delivered in 2012  Un.

city

operated communities

receiving body

1

RA

ÁGUAS DE SANTA BÁRBARA

Águas de Santa Bárbara

Pardo River

flow (l/s) 44

2

RB

ADAMANTINA

Adamantina - West Basin

Ribeirão do Rancho Brook

58

3

RG

ALTAIR

Distrito Suinana

Macacos Brook

1.1

4

RM

ANHEMBI

Sede

Tietê River

8.3

5

RV

ARAPEÍ

Sede

Barreiro de Baixo River

8

6

RM

BOITUVA

Campos de Boituva

Ribeirão Gerivá

50

7

RM

CESÁRIO LANGE

Torninos connected to an existing STP

Onça Brook

3

8

RA

DUARTINA

Duartina

Alambari River

45 3.5

9

RR

ELDORADO

Itapeúna

Ribeira do Iguape River

10

RJ

ELIAS FAUSTO

Cardeal District

Buru and Tietê Rivers

5

11

RA

GUAREÍ

Guareí

Guareí River

20

12

RN

ILHABELA

STP Praia do Pinto (Ponta Azeda)

Atlantic Ocean Tributary

13

RG

ITOBI

Itobi

Verde River

15.6 87.3

14

RJ

ITUPEVA

Itupeva - STP Nica Preta

Jundiaí River

15

RT

MERIDIANO

Santo Antonio do Viradouro District

Ribeirão Santo Antonio

16

RG

MOCOCA

Igaraí District

Francos Brook

10

1 1.7

17

RT

NOVA GRANADA

Mangaratu District

Mangaratu Brook

1.8

18

RB

PARAGUAÇU PAULISTA

Conceição de Monte Alegre/Roseta

Sapé Brook

5.5

19

RB

PARAGUAÇU PAULISTA

Sapezal

Sapé Brook Tributary

1.2

20

RT

PEDRANÓPOLIS

Sede - STP

Forte Brook

4.6 161

21

RR

REGISTRO

Sede - Duplication

Ribeira do Iguape River

22

RT

RUBINEIA

Esmeralda District

Taiaçu Brook

1

23

RM

SALTO DE PIRAPORA

SDP connected with existing STP

Pirapora River

88

STPs under construction  Un.

city

operated communities

receiving body

24

RM

ÁGUAS DE SÃO PEDRO

Sede

Ribeirão Araquá

flow (l/s) 34.6

25

RM

ANHEMBI

Piramboia

Águas do Brejão and Águas Claras Brooks

8.3

26

RR

APIAÍ

Sede

Ouro and Fundão Brooks, Ribeirões Água Limpa, Palmital and Ponte das Tábuas

27

RM

ARAÇARIGUAMA

Sede

Ribeirão Araçariguama

76 61.7

28

RA

BARÃO DE ANTONINA

Sede

Itararé River

7

29

RM

BOITUVA

Pau D'Alho

Pau D'Alho Brook

71

30

RV

CACHOEIRA PAULISTA

Sede

Paraíba do Sul River

31

RV

CAMPOS DO JORDÃO

Sede

Capivari and Sapucaí-Guaçu Rivers

138 213.4

32

RM

CAPELA DO ALTO

Bairro do Porto

Sapucaí River

5

33

RG

CÁSSIA DOS COQUEIROS

Sede

Cubatão River

3.6

34

RM

CESÁRIO LANGE

Sede

Aleluia River and Monte Alegre Brook

37

35

RG

COLÔMBIA

Laranjeiras District

Grande Brook

0.7 23

36

RM

DOURADO

Sede

Ribeirão Dourado

37

RT

FERNANDO PRESTES

Agulha District

Ribeirão dos Porcos

38

RV

GUARAREMA

Parateí

Parateí River

14.3 23.7

3

39

RM

IBIÚNA

Bairro Paruru

Ribeirão Paruru

40

RR

ITAOCA

Sede

Palmital River

4.6

41

RA

ITARARÉ

Sede

Itararé River

138

42

RV

LAVRINHAS

Capela do Jacu

Jacu Brook

2.8

43

RT

MAGDA

Sede

Talhado Brook

6.2

44

RT

MONTE APRAZÍVEL

Balduino

Seepage

1

45

RJ

MONTE MOR

São Clemente

Capivari River and Água Comprida Brook

47

46

RA

PAULISTÂNIA

Sede

São Jerônimo Brook

2.5

47

RT

PEDRANÓPOLIS

Santa Izabel do Marinheiro

Forte Brook

0.8

48

RB

PLATINA

Sede

Pari River

6

49

RV

QUELUZ

Sede


23

50

RA

RIBEIRÃO GRANDE

Sede

Ribeirão Grande

13.5

51

RV

SÃO BENTO DO SAPUCAÍ

Sede

Sapucaí-Mirim River

24.6

52

RT

SÃO JOÃO DAS DUAS PONTES

Vila Aparecida District

Seepage

0.7

53

RV

SÃO JOSÉ DOS CAMPOS

Pararangaba


404

54

RV

SÃO JOSÉ DOS CAMPOS

STP Lavapés


1,168

55

RM

SÃO ROQUE

Sede

Guaçu Brook, Aracaí, Carambei, Bandeirantes Rivers and Ribeirão do Marmeleiro

254.5

56

RN

SÃO SEBASTIÃO

Baleia and Sahy

Sahy River

57

RN

SÃO SEBASTIÃO

Paúba

Paúba River

58

RN

SÃO SEBASTIÃO

Una/Engenho

Cubatão River

41 30 43.6

59

RA

TIMBURI

Sede

Ribeirão do Retiro

1.3

60

RT

URU

Sede

Uru Brook

2.5

61

RJ

VÁRZEA PAULISTA

Campo Limpo Paulista/Várzea Paulista

Jundiaí River

560

33

MANAGEMENT WITHIN THE CURRENT CONTEXT OF THE SECTOR

34

The strategic goal of maintaining and expanding the operated city base, ensuring continuous and progressive improvement of the business and communities served, drove the company to anticipate institutional legal changes that would later emerge in the sector.

Since 2005, Sabesp has been negotiating with the State Government to continue rendering water supply and sanitary drainage services to operated cities based on pioneering contractual arrangements, which encompass the regulation and enforcement of services by an external entity and cover the adoption of service goals and quality, established in municipal plans based on public hearings and consultation. The initiative narrowed the relationship with customer cities and broadened access and transparency of information regarding the services, leveraging social engagement and control over the company’s performance and contractual compliance.   Subsequently, the edition of the new regulatory basic sanitation landmark – Federal Law no. 11.445/07 –, which introduced several innovations regarding contracting, provision, regulation and enforcement of basic sanitation services, revealed such corporate strategy, which enhances the company’s operations within an environment regulated by several control and supervision agencies and entities.  These entities and agencies that regulate the company’s activities since 2007 include the São Paulo State Sanitation and Power Regulatory Agency (Arsesp), created by Law LCE 1.025/2007, with deliberative independence, administrative, budget and financial autonomy to standardize and oversee services. The new regulatory landmark also allowed operated cities to create regulatory agencies that can eventually intervene with the company, affecting our activities. 

Sabesp currently renders water and sewage services to 363 cities. Between January 1, 2007 and December 31, 2012, we renewed service agreements with 258 cities for 30 additional years (including São Paulo), 33 of which were signed in 2012.   On December 31, 2012, these 258 cities accounted for approximately 70% of the company’s total revenue, including construction revenues, and 63.5% of intangible assets. However, the company continues to operate in the 67 remaining cities where agreement terms expired, currently negotiating the basic terms for its permanence.  Between January 1, 2013 to 2032, agreements with 38 cities will expire. They jointly account for 9.4% of the company’s total revenue, including construction revenues, and approximately 6% of intangible assets. In these cases, Sabesp will also employ its best efforts to renew agreements for at least another 30 years.   In metropolitan regions, which focused on the legal debate regarding the proprietorship of sanitation services, pending Supreme Federal Court (STF) deliberation, Sabesp and the cities within such region adopted a specific contractual model, which allows them to exert public functions of common interest.  

between 2007 and 2012:   renewed contracts with  

258 cities,  

the equivalent to

70% of the revenue


35


The model supersedes the current STF ruling, which attributes planning, regulation and oversight duties regarding basic metropolitan sanitation services to an entity to be created by the State and municipal governments involved. The term to adjust applicable laws to such ruling is up to 2 years.   Sabesp also expanded its municipality base by acquiring minority shareholding interest in special purpose entities established with private partners to provide water and/or sewage services in Andradina, Castilho, Mairinque and Mogi Mirim. No investments were effected in such companies, as indicated in Explanatory Note 2.1 of the 2012 financial statements.  Initial construction works in Mogi Mirim, where we are responsible for modernizing, implementing, and managing the local sewage treatment system, began in June 2012. Including an STP with processing capacity of 150 l/s, works leveraged the city’s treated sewage rate from 0% to 70%. In Mairinque, water supply rose from 88% to 97% since 2010 and sewage collection increased from 66% to 71%.

   

Arsesp   Regulatory   Standards   

The new regulatory landmark of the sector and technical standardization from Arsep should contribute to continuously improving our activities, enhancing control over its activities and ensuring compliance with all goals and other contractual duties established with operated cities.   Since 2008, Arsesp has been publishing deliberations regarding the company,

regulating: i) water and sewage service provision conditions; ii) violations and penalties; iii) sanction procedure; iv) handling of information and documents submitted by Sabesp to the agency; v) compensation for punctual lack of supply, currently suspended, to enhance the technical debate; and vi) tariff revision and restructuring.   Also responsible for Sabesp’s tariff regulation, based on applicable guidelines and laws of the sector, Arsesp rehearsed its first initiative to revise the company’s tariffs in 2009. However, due to the complexity of such subject, an extensive process of reviewing calculation methodology and criteria regarding the company’s fees was initiated, detailed in this report’s "Tariff revision" section.  The implementation processes of such standards began in 2009 in a gradual and progressive manner, extending towards 2012 and expected to persist over the next few years, with results and impacts especially in the business and operational areas, with the possibility of involving legal disputes. However, the extension of such impacts still cannot be estimated.   From 2007 to 2012, Arsesp’s oversight of water supply and sanitary drainage services in cities did not impose relevant penalties and sanctions.  Regardless, new normative requirements for the basic sanitation sector, despite already being considered and mostly implemented in the company, still impose major challenges, considering the territorial and cultural diversity and scope, social purposes, multiple and complex interfaces arising from Sabesp’s activities, as well as the rigorous controls and supervision to which the company is submitted. Sabesp is still unable to estimate all the impacts of Law no. 11.445/07 and regulatory standards over the company’s businesses, since there are still some uncertainties surrounding its implementation. 

 


 

Economic and financial sustainability    Under the financial aspect, an extremely relevant challenge for the sector is to ensure sufficient resources to render universal services with quality and reliable water supply, currently even more pressed due to pollution, disorganized occupation, and climate changes, which may increase the need for investments.  Funded by tariffs, public and private resources, both domestic and foreign, the Brazilian sanitation sector requires substantial investment to broaden its service coverage, which in 2010 was 81% for water supply, 46% for sewage collection, and 38% for sewage treatment, according to data from the National Sanitation Reporting System (SNIS) of the Ministry of Cities.  

However, such rates vary significantly among different Brazilian regions; in the Southeast, where Sabesp operates, these figures are considered substantially high when compared to other regions: water coverage of virtually 100% and 67% of sewage collection in urban areas. The Ministry of Cities estimates that approximately R$ 55.9 billion will be required to expand and replace sanitary drainage and water supply in urban areas of the State of São Paulo by 2030.   In the past five years, in compliance with its mission – provide public basic sanitation services, contributing to improve health, quality of life and the environment –, the company invested an average of R$ 2.2 billion per annum in water supply and sanitary drainage; that is, approximately 30% of the total invested annually in the country,, according to data from the National Sanitation Reporting System (SNIS) of the Ministry of Cities.  In 2012, the company reached its annual investment target and followed the 2011 investment level, totaling a little over R$ 2.5 billion. 

R$ 2.2 billion  

(1)

R$ million

invested per annum  in water supply and sewage drainage

Investment history 3,000 2,440

2,500 2,000

2,059

2,536

2,194

1,734

1,500

30%

1,000 500 0

of the total invested annually in the country’s sector

2008

2009

2010

2011

2012

(1) Does not include commitments undertaken with program contracts (R$ 253 million, R$ 18 million, R$ 63 million, R$ 139 million and R$ 155 million, in 2008, 2009, 2010, 2011 and 2012, respectively)


37


2013-2015 investment projection

1,160.1

Total

1,008.9 1,526.7 2,535.6

Note: does not include commitments undertaken with program contracts (R$ 155 million)

1,000 500 0

2013

2014

2015

2016

Sewage treatment Sewage collection Water

Investments performed in 2012, divided by segment and region, are presented in the chart above.  For the 2013-2016 period, Sabesp expects to invest approximately R$ 9.9 billion, distributed among the services illustrated in the chart above, in order to effectively implement its activities pursuant to its future vision, to be recognized as the company that provides universal water supply and sanitary drainage public services based on sustainability, competitiveness, and excellence in customer service by 2018.  It is important to note that, in order to access the financial resources required to reach such goal, it is essential for Sabesp to maintain proper operational and financial performance. For such, the company strives to develop efficient management activities, including actions focused on reducing costs by increasing efficiency and promoting better contracts, in addition to actively engaging in the tariff revision process along with Arsesp,


452

724.3

948

435.8

1,500

784

Regional systems (countryside and coast)

1,018

1,375.5

924

802.4

1,153

573.1

2,274

981

São Paulo Metropolitan Region

470

2,000

2,412 488

Total

2,622

2,589 444

Sewage

2,500

1,130

Water

3,000

1,015

(R$ million)

R$ million

investments per region   and segment in 2012

in order to establish tariffs that adequately compensate the provision of services by the company.  The efficiency of the strategy adopted by Sabesp throughout the years is recognized by the financial market and has once again raised the company’s rating by the Fitch Ratings credit risk rating company in 2012, moving from the International Scale "BB" to "BB+" and in the National Scale from "A+" to "AA-", considering that the company is already rated as "BB+"in the International Scale and "AA+" in the National Scale by the Standard & Poor’s credit risk rating company since December of 2011.  Despite rendering services to approximately 60% of the São Paulo State population, which is the highest of the country, Sabesp has not been considered for non-onerous Government resources, which forces the company to seek other funding sources up to par with the sector’s characteristic investment maturity. A total of R$ 1.6 billion were raised throughout the year, detailed in the following section.

LOANS AND FINANCING FOR INVESTMENT 

R$

710 million 

Japan  International  Cooperation  Agency (Jica)

R$

375.4 million 

Caixa  Econômica  Federal

R$

180.7 million  BNDES

  Japan International Cooperation Agency (Jica): loan contract for the second stage of the Loss Reduction Corporate Program, totaling ¥ 33.6 billion (equivalent to R$ 710 million at the signature date). This stage encompasses estimated investments of R$ 1.1 billion (¥ 52.207 billion), of which R$ 390 million (¥ 18.623 billion) shall be incurred by Sabesp. The financing term is 25 years (seven-year grace period) with interest rate of 1.7% per annum.     Caixa Econômica Federal (CEF): 58 contracts covered in the Growth Acceleration Program II, totaling R$ 375.4 million, as detailed below:  • 36 contracts to fund studies, projects and works regarding water supply and sanitary drainage in several cities operated by Sabesp. The total approximate value is R$ 215 million, with interests indexed to the TR of 6% per annum, in addition to an administrative fee of 1.4% per annum and risk rate of 0.3% per annum. The total term is up to nine years for the study and project modality, and up to 24 years for water supply and sanitary drainage works;  • 22 contracts to fund water supply and sanitary drainage works in several cities operated by Sabesp. The total approximate value is R$ 160,4 million, with interests indexed to the TR of 6% per annum, in addition to an administrative fee of 1.4% per annum and risk rate of 0.3% per annum. The total term is up to 24 years.    National Bank for Economic and Social Development (BNDES): loan contract covered in the Growth Acceleration Program II to fund sanitary drainage system expansion and optimization works in the cities of São Paulo, Itapecerica da Serra, Embu das Artes, Carapicuíba, Osasco, São Bernardo do Campo

and Cotia, as well as the development of the executive project of the São Lourenço Production System, totaling approximately R$ 180.7 millions and interests indexes to the TJLP plus 1.72% per annum. The total term for the works is 15 years and eight years for the executive project.   In February 2013, we entered a loan contract to fund part of the execution project regarding the Third Stage of the Tietê River Decontamination Program funded by the Inter-America Development Bank (BID). The purpose of the loan contract is to implement collectors, interceptors, collection systems and household sewage connections, as well as the expansion of sewage treatment capacity in the São Paulo Metropolitan Region, totaling R$ 1.3 billion and interests indexed to the TJLP plus 1.66% per annum. The total term is 15 years (three-year grace period).  The Financing Contract no. 01.2.619.3.1 and Onlending Contract no. 10/669.748-6, signed on August 04, 2002, financially settled all obligations arising from effective Financing and Onlending Contracts, considering that the last installment of interests and amortization was effectively paid on February 15, 2013. The BNDES is expected to submit a document officially concluding the financing contract by 03/31/2013. 

   

Capital market     In February 2012, we completed the 15th debenture issuance, totaling R$ 771.1 million, in two series, the first amounting to R$ 287.3 million, which pays interest equivalent to the CDI plus 0.99% per year, and the second amounting to R$ 483.8 million, which pays interest equivalent to the IPCA (extended consumer price index) plus 6.20% per year.   These funds were raised to settle financial commitments maturing in 2012, especially for the settlement of the 13th debenture issuance, amounting to R$ 600 million, which matured in August and was settled in advance in February.


39


The funds raised also support the amortization, in March 2012, of 50% of the second series of the 11th debenture issuance, totaling R$ 202.5 million.  In December 2012, we completed the 15th debenture issuance, totaling R$ 500 million, in a single series, which pays interest equivalent to the CDI plus 0.30% in the first six months (the CDI surcharge varies half-yearly, until its maturity, in November 2015, when it will reach 0.70%). These funds were raised to settle financial commitments maturing in 2012 and 2013.  Additionally, in January 2013, we completed the 17th debenture issuance, totaling R$ 1 billion, in three series, the first amounting to R$ 424.7 million, which matures in January 2018, which pays interest equivalent to the CDI plus 0.75% per year, the second totaling R$ 395.2 million, which pays interest equivalent to the IPCA and annual interest rates of 4.5%, which will mature in 2020, and the third series totaling R$ 180.1 million, which will mature in January 2023, which pays interest equal to the IPCA plus 4.75% per year.  The 17th issuance funds were raised to settle financial commitments maturing in 2013. In March, the company settled the 11th debenture issuance, issued in April 2010, through the amortization of one third of the 1st series and the 50% remaining from the 2nd series, as well as the anticipated withdrawal of the remaining balance of the 1st series, which will mature in March 2015.   

 

Debt review

 

  Most of the company’s debt (54.2%) was raised with domestic or foreign sources, multilateral organizations, at low costs and long terms, choosing fund raising in the capital markets preferably to manage the debt. 


At the end of 2012, our total debt was R$ 9.1 billion, and the debt-to-EBITDA rate was 2.5 times; that is, significantly lower than the 3.65 times limit established in some contracts, such as financing and debt securities. The net debt-to-EBITDA rate was 2 times, which reinforces a favorable outlook of the company’s financial health.   Foreign currency debt totaled 35% of the total debt. The yearly amortization amount totaled R$ 1.5 billion, while raised values reached R$ 1.6 billion. 

   

Tariff revision    In order to maintain or expand the level of investments and ensure universal sanitation services within its operating area by the end of the decade, the services rendered by Sabesp must be adequately compensated.  Sabesp’s tariffs are among the lowest of the country, ranking 16th among 27 state-owned companies, including lower than those collected by companies located in far more vulnerable States than São Paulo, such as Alagoas and Piauí, according to the 2010 ranking published by the National Sanitation Reporting System (SNIS).  Additionally, according to the Family Budget Survey – base years 2008-2009, of the IBGE, water supply and sanitary drainage services account for only 0.66% of average monthly expenses of families in the urban area of the Southeast region of the country, compared to 2.3% attributed to electrical power, and less essential services, such as mobile telephony, which accounts for 0.96%.  Investments more than doubled in a ten-year period, without reflecting a corresponding increase in revenues; an inconsistency that has been temporarily compensated by the company’s ability to maintain own capital generation within sustainable levels. 

Sabesp tariffs are among the lowest of the country, ranking 16th among   27 state-owned companies

    The tariff revision process that will establish a new methodology to calculate Sabesp’s tariff continued throughout 2012. The company submitted the results of asset base and Business Plan assessments to the agency, containing revenue, expense and investment information, allowing Arsesp to publish a Technical Note in 2012, containing the Initial Maximum Average Tariff (P0) and Efficiency Gain Factor (X), which were submitted to public consultation and hearings. On January 15, 2013, Sabesp submitted its contributions to the Technical Note for Arsesp’s appraisal.  The disclosure of this stage’s results, expected for February 22, 2013, was extended to March 22 2013, in order to clarify the content under debate with the São Paulo Sewage and Water Services Managing Committee, at the city hall’s request.  Arsesp’s assessment activities regarding the company’s assets and final compensation base value currently proceed in compliance with process stages and events schedules established by the agency, as provided below:  • April – submission of a tariff structure proposal from Sabesp to Arsesp;  • July – public hearing regarding the final Maximum Average Tariff (P0), the Tariff Structure and tariff values for the remainder of Sabesp’s Second Cycle;  • A ugust – publication of the Tariff Revision results;   • S eptember – application of the new tariff.  Additionally, in January 2013, Arsesp published the final draft of the Regulatory Chart of Accounts and Regulatory Accounting Manual to be used by companies in the São Paulo State sanitation segment, regulated by the agency. One of the main goals of the manual is to define requirements regarding specific regulatory accounting information, to be used by the regulator when assessing the concession’s economic and financial balance. 

Stock market    In the annual performance, the company’s papers presented the third highest Ibovespa appreciation, recording a 67% appreciation compared to 2011. Our stock closed the year at R$ 86.87, while Ibovespa appreciated only 7.4%. In the U.S. market, the company’s ADRs recorded a high of 50.2%, compared to a 7.3% Dow Jones appreciation. With this performance, Sabesp’s previous market value of R$ 11.8 billion in 2011, reached R$ 19.8 billion in 2012.  Such appreciation is mainly attributed to expectations regarding the potential benefits of the tariff revision regarding the company’s investment return and maintenance. In addition, Sabesp’s shares were indicated as substitutes of the power companies' papers after their respective tariff reduction. It is important to note that such performance may also have been influenced by the country’s growth deceleration, which drives investors to seek shares less vulnerable to economic fluctuations, since the company’s income is more intimately related to population growth than the GDP. The number of company shareholders on BM&FBovespa increased by 66.4% in one year.  Our stock was traded in all BM&FBovespa’s trading sessions, totaling a financial volume of R$ 7.7 billion in 2012. In the U.S. market. the company closed 2012 with 27.8 million outstanding ADRs. The financial volume traded in the NYSE in 2012 was US$ 6.1 billion, almost 64.4% higher than in 2011.  In 2012, the number of financial institutions monitoring Sabesp papers and issuing share and ADR value opinions remained stable: approximately 20 institutions.  It is important to note that in early 2013, under the purpose of improving ADR liquidity and adjust its price to levels recommended by NYSE, Sabesp performed a ratio change, in which each ADR corresponded to one share. Each ADR previously corresponded to two shares. 

Sabesp market  value in 2012:  R$

19.8 billion


41


stock market performance

50.2%

67%

25.3% 50.3% 24.4%

2011

2012

2011

appreciation of ADRs in the U.S. market

2012

share   appreciation

66.4%

64.4%

ownership structure   on 12/31/2012 sbsp3 Novo Mercado bm&fbovespa

2011

2012

increased number of shareholders

2011

2012

increase of the financial volume traded on NYSE

Our stock is traded on the BM&FBovespa under ticker symbol SBSP3 and on the New York Stock Exchange under American Depositary Receipts (ADRs), under ticker symbol SBS. The company is still part of the main indexes of the Brazilian and NYSE stock markets, including the Dow Jones Sustainability Index, which it adopted recently, in February 2013. Additional information available at sabesp.com.br/rs2012.     

corresponding to approximately R$ 2.54 per common share and a dividend yield of 4.9%.   Regarding 2012, the Board of Directors approved the payment of interest on own capital totaling R$ 534.3 million, or R$ 2.345 per common share and a dividend yield of 2.7%, to be paid within up to 60 days after the Annual Shareholders’ Meeting, to which the 2012 accounts will be submitted for approval.     

Dividends 

Debt of municipalities to which we supply bulk water 

  Under our bylaws, common shares are entitles to mandatory minimum dividends corresponding to 25% of the net profit for the year, obtained after the deductions required or permitted by law, and   can be paid as interest on capital.  In some municipalities to which we supply In 2012, we paid R$ 578.7 million in dividends bulk water there are pending debts regarding as interest on own capital, related to 2011, water sales, for which the company has been


sbs nyse

São Paulo   State Government

   

Consolidated financial and economic performance  

  The sturdiness of our business is reflected in financial results. In 2012 the company recorded profits of R$ 1.9 billion, a 56.3% increase compared to 2011.   The gross operating revenue regarding the provision of water supply and sewage collection and treatment services increased by R$ 624.6 million, or 7.5%, increasing from R$ 8.3 billion in 2011 to R$ 8.9 billion in 2012.  This result is essentially attributed to the increased revenue volume of 2.4% in water and 3.2% in sewage, totaling 2.7% for both services, as well as the tariff adjustment of 6.83% applied in September 2011, and 5.15% applied in September 2012. The following charts detail water and sewage revenue volumes based on use category and region.  Construction revenue increased by R$ 239.8 million, or 10.7% compared to the previous year, mainly due to greater investments effected in 2012.  In 2012, product and service rendered costs, administrative, business and construction expenses increased by 5.2% (R$ 392.3 million). Cost and expenses in net income, however,

9.1 R$ billion

employing its best efforts in order to recover due values.  Whenever negotiations are not possible, debts are collected via court order, as is the case in the cities of Guarulhos, Mauá, Santo André and Diadema; judiciary bonds have already been issued to the former two, and currently await payment. For Santo André, the billing suit is also forwarded by issuing judiciary bonds.   Regarding Diadema, assessments to create a new water and sewage company in the municipality, with shareholding interest from Sabesp, have been concluded and indicated a business feasibility opportunity; however, changes in the city’s administration forced us to resume negotiations in order to amend certain articles of the law. It is still not possible to estimate when the company will be created.   In 2012, all of the aforementioned cities effected partial payments of monthly invoices issued for bulk water supply. It is important to emphasize that the municipalities of Mogi das Cruzes and São Caetano paid all invoices in full at their respective maturity dates.  In addition to debts regarding bulk water supply, the cities of Diadema and Mauá hold additional debts towards Sabesp arising from due asset indemnity due to anticipated concession’s repossession.   In the city of Diadema, the execution was proceeded upon freezing of ICMS product transfers destined to the city. The freezing measure for such transfers is currently suspended, due to the suspensive effect attributed to the municipality’s extraordinary appeal. In parallel, 20% of Saned’s revenues have been weekly pledged, using such amount to settle a percentage of the debt related to due Sabesp attorney’s fees.  As for the city of Mauá, the petition to sentence the municipality and the Mauá City Basic Sanitation (Sama) to effective payment of the debt was granted. Such sentencing was sanctioned by the Supreme Federal Court and cannot be appealed. Sabesp began enforcement in October 2012. The citation for the municipality and Sama regarding payment is currently awaited, whose values may not be discussed. 

8

2

9.8 2.1

10.5

11.4

2.2

2.5

6 4

3.1

3.4

3.7

4

R$ 1.9 billion   in 2012

Gross Operating Revenue Construction

2 0

profit of  

Sewage 4

4.3

4.6

4.9

2009

2010

2011

2012

Water


43


reduced from 75.4%, in 2011, to 73.4% in 2012. Therefore, the net operating income totaled R$ 10.8 billion, an 8.2% increase compared to the previous year.  The Adjusted EBIDTA recorded an increase of 12.2%, rising from R$ 3.2 billion, in 2011, to

R$ 3.6 billion in 2012, and the Adjusted EBITDA margin reached 33.5%, compared to 32.3% from the precious fiscal year. Not considering construction cost and income effects, the Adjusted EBITDA margin totals 42.9% in 2012 (41.1% in 2011).       

Water and sewage revenue volume (1) per use category 

(millions of m3)

Water

Sewage

Water + sewage

2011

2012

%

2011

2012

%

2011

2012

%

Residential

1,488

1,530

2.8

1,220.7

1,262.6

3.4

2,708.7

2,792.6

3.1

Business

167.6

172.8

3.1

156.4

160.5

2.6

324

333.3

2.9

38.7

38.3

(1)

40.5

41.6

2.7

79.2

79.9

0.9 2.9

Industrial Public Total retail Bulk Reclaimed water Total Notes:

(1)

53.1

54.8

3.2

41.5

42.5

2.4

94.6

97.3

1,747.4

1,795.9

2.8

1,459.1

1,507.2

3.3

3,206.5

3,303.1

3

297.3

297.5

0.1

27.2

27.3

0.4

324.5

324.8

0.1

0.3

0.4

33.3

-

-

-

0.3

0.4

33.3

2,045

2,093.8

2.4

1,486.3

1,534.5

3.2

3,531.3

3,628.3

2.7

Not audited

Water and sewage revenue volume (1) per region 

(millions of m3)

Water Metropolitan Regional systems (2) Total retail Bulk Reclaimed water Total Not audited.

(2)

Water + sewage

2012

%

2011

2012

%

2011

2012

%

1,150.6

1,181.9

2.7

976.8

1,005.7

3

2,127.4

2,187.6

2.8

596.8

614

2.9

482.3

501.5

4

1,079.1

1,115.5

3.4

1,747.4

1,795.9

2.8

1,459.1

1,507.2

3.3

3,206.5

3,303.1

3

297.3

297.5

0.1

27.2

27.3

0.4

324.5

324.8

0.1

0.3

0.4

33.3

-

-

-

0.3

0.4

33.3

2,045

2,093.8

2.4

1,486.3

1,534.5

3.2

3,531.3

3,628.3

2.7

Comprised of the countryside and coast regions

R$ billion

Notes:

(1)

Sewage

2011

8 10.8 6 8

8.6

9.2

2009

2010

9.9

7.8

6 4

Net operating revenue history

2 0 2008


2011

2012

3.6 3.2

33.5%

42.9%

32.4%

41.1%

44.7%

41.2%

34.9%

2008

2.7

31.8%

36.7%

46.3%

2.9

3.2

2009

2010

2011

2012

Adjusted EBITDA and EBITDA margin history

EBITDA (R$ billion) Adjusted EBITDA Margin Adjusted EBITDA Margin without revenue and construction cost

Adjusted EBITDA reconciliation (non-accounting) 

(R$ million)

2008

2009

2010

2011

2012

Net profit

862.9

1,507.7

1,630.4

1,223.4

1,911.9

Financial income

973.1

10

379.4

633.6

301.4

Depreciation and amortization

618.2

562.3

552.2

768.8

740.1

Income tax and social contribution

285.3

602.6

662.3

497.4

632

Other net operating expenses (1)

125.5

44.4

(1.8)

90.1

19.8

Adjusted EBITDA (2)

2,865

2,727

3,222.5

3,213.3

3,605.2

Adjusted EBITDA margin

36.7

31.8

34.9

32.3

33.5

Construction revenue

(1,676.9)

(2,039.8)

(2,130.7)

(2,234.8)

(2,474.6)

Construction cost

1,650.5

2,009.6

2,081.1

2,186.3

2,423.8

Adjusted EBITDA without revenue and construction cost

2,838.6

2,696.8

3,172.9

3,164.8

3,554.4

46.3

41.2

44.7

41.1

42.9

Adjusted EBITDA margin without revenue and construction cost

Notas: (1) Other net operating expenses refer mainly to fixed assets write-off, provision for losses with intangible assets, losses with economically unfeasible projects, deducted from fixed asset sales revenues, bid sales, indemnities and reimbursement of expenses, fines and securities, real estate leasing, reclaimed water, Pura and Aqualog projects and services  (2)

Adjusted EBITDA corresponds to net profit before: (i) depreciation and amortization expenses; (ii) income tax and social contribution (federal income taxes); (iii) financial income; (iv) other net operating expenses. The Adjusted EBITDA is not deemed a financial performance measurement based on accounting practices adopted in Brazil, the International Financial Reporting Standard (IFRS) or US Gaap (Generally Accepted Accounting Principles in the United States), nor must it be considered separately or as an alternative to net profit, operating performance measurement, or operating cash flow alternative, or liquidity measurement. The Adjusted EBITDA does not provide any standard meaning, and the company’s definition of Adjusted EBITDA may vary from those of other companies. The company’s administration believes that the Adjusted EBITDA provides a useful measurement of its performance, extensively applied by investors and analysts to assess performance and compare companies. Other companies may employ different Adjusted EBITDA calculation methods. The Adjusted EBITDA is not part of the financial statements  The purpose of the Adjusted EBITDA is to present an operating economic performance index. Adjusted EBITDA corresponds to net profit before net financial expenses, income tax and social contribution (federal income taxes), depreciation and amortization, and other net operating expenses. The Adjusted EBITDA is not a financial performance index recognized by the Corporate Legislation Method and most not be considered separately or as an alternative to net profit to indicate operating performance, as an alternative to operating cash flows, or as a liquidity index. Sabesp’s Adjusted EBITDA is used as a general indicator of economic performance, not affected by debt structuring, interest rate fluctuation, tax modifications, or depreciation and amortization levels. Subsequently, the Adjusted EBITDA is used as an adequate instrument to regularly compare operating performance. In addition, there is another formula to calculate the Adjusted EBITDA that is adopted in the clauses of specific financial commitments. The Adjusted EBITDA provides a better understanding not only of the operating performance, but also the ability to fulfill the company’s obligations and raise funds for investments in capital goods and working capital. The Adjusted EBITDA, however, presents limitations that prevent it from being used as a profit indicator, since it does not consider other costs arising from Sabesp’s activities or other costs that may considerably affect its profits, such as financial expenses, taxes, depreciation, capital expenditures and other related charges


45


Aggregate economic value in three years

EC1

Component A - Direct economic value added Revenues

(a)

B- Economic value distributed Operating costs

(b)

Employee salaries and benefits (c) Payments to shareholders and lenders

(d)

Payments to government (e) Investments in community

(f)

Aggregate economic value (a-b)

 

(R$ thou)

2010

2011

2012

10,174,994

11,077,360

11,820,477

10,174,994

11,077,360

11,820,477

8,157,364

9,241,671

9,410,019

4,289,738

4,716,260

5,113,183

1,405,063

1,810,686

1,735,434

1,089,695

1,377,490

1,158,562

1,341,635

1,300,799

1,364,646

31,233

36,436

38,194

2,017,630

1,835,689

2,410,458

 

Notas: (a) Consists of all operating revenues, financial and other operating income, interest and inflation and exchange rate change gains, and income earned in connection with the construction of own asset. (b) Consist of operating costs and expenses, such as: materials in general, treatment materials, services, power and electricity, general expenses and employees’ training courses. Excludes depreciation and amortization expenses and write-off of receivables. (c) Consist of salaries and related charges. Includes amounts paid to the government (employees’ charges and taxation). (d) Consists of Interest on Capital, financial expenses (interest, fines, and other financial expenses), and inflation and exchange rate losses. Excludes retained earnings. (e) Consist of Cofins/Pasep on operating revenue and non-operating income, tax expenses, income tax and social contribution, and income tax on remittances abroad. (f) Consist of institutional support, sponsorships, receiving, exhibits and tax incentives distributed in the education, culture, health, sport, hunger eradication and food security areas.  Note: Other operating expenses were not included in any of the items above and totaled R$ 37.6 million in 2010, R$ 162.6 million in 2011, and R$ 91.5 million in 2012.

Corporate   governance structure  GRI 4.1/4.2/4.3 Sabesp’s corporate governance model reflects its state-owned mixed-economy nature, whose shareholding interest must be greater than 50% of the share capital, comprised exclusively by common shares.  The Board of Directors maintained all ten members elected in the Shareholders' Meeting held in April 2012; three are independent directors, as required by the Novo Mercado regulations (bmfbovespa.com.br). In December, however, one board member was replaced as indicated by the controlling shareholder.   Except for our CEO, none of our other officers is a member of the Board of Directors; the CEO may not hold the position of chairman of the Board of Directors. Our executive board


also maintained its structure throughout 2012, except for the replacement of the Technology, Projects and Environment Officer, João Baptista Comparini. The latter was replaced by João Paulo Tavares Papa in March 2013.   Our governance structure is presented in the following chart. Additional information regarding the operation of all governance instances is available in the "Corporate Governance" section of the company website’s Investor Relations area (available at sabesp.com.br/ investidores).  Ethical values that guide the activities of Sabesp and its relationship audiences are detailed in the corporate Code of Ethics and Conduct, and its compliance is monitored by the Ethics and Conduct Committee, which relies on resources such as the Internal Denouncement Channel, the Corporate Accountability Procedure, the Ombudsman and Customer Service. The internal channel receives anonymous tips and the result of investigation processes is submitted to

corporate governance structure shareholders' meeting board of auditors

board of directors 

independent   audit audit committee

internal audit

executive board

executive governance board

  the Board of Auditors. In 2012, a total of 160 denouncements, 61% of which were investigated and 39% are currently being assessed. Of the total amount of denouncements, 22% relate to improper behavior, such as moral harassment, prejudice, discrimination, stalking and unfair treatment. SO4 During this period, sanctions 27 company and outsourced employees were sanctioned (one warning, two suspensions and 24 dismissals). HR4   SO2 Based on materiality criteria, the formal process of assessing controls and identifying fraud-related risks considered the most representative units. Assessed risks allow the improvement of controls throughout the entire company.  SO3/SO4 With the purpose of preventing irregularities in processes deemed relevant, the company is currently implementing a corporate fraud prevention program, in order to update fraud risk audits, adjust policies and procedures, revise indicators and disseminate anti-corruption practices among employees. 

 

Director and officer compensation    The compensation of directors and officers in 2012, including benefits, totaled approximately R$ 3.2 million. We paid around R$ 1.1 million in variable compensation.   It is important to note that, in August 2012, the State government enacted Decree no. 58.265, which prohibits the remunerated participation of political agents and servers from the State Administration from directly or indirectly operating in more than two board of directors our board of auditors of mixed-economy companies, as well as other entities directly or indirectly controlled by the State, as well as prohibiting remuneration based on results, eventual bonuses or profit sharing programs. Implemented in the company, the decree affected the remuneration of only one officer. 


47


GRI 4.5 According to the Brazilian corporate law, the compensation paid to members of the board of directors, members of the board of auditors and executive officers is set, as a whole, by the General Shareholders' Meeting. Our director and officer compensation policy is established according to the guidelines of the of the São Paulo State Government, mainly based on market performance and competitiveness, always subject to the approval by shareholders at the Annual Shareholders’ Meeting. Thus, the aforementioned decree shall be addressed and sanctioned by the General Shareholders' Meeting to be held in April 2013. 

   

External audit services    Regarding the relationship with independent auditors, Sabesp and all companies in which it has minority shareholding interest comply with the principles that preserve the independence of external auditors, preventing them from auditing their own activities, exerting management functions and advocating in favor of clients. PricewaterhouseCoopers Auditores Independentes audited Sabesp between the 3Q08 and 2Q12, and Deloitte Touche Tohmatsu Auditores Independentes began auditing the company’s financial statements by reviewing quarterly information ITR regarding September 30, 2012.  KPMG Auditores Independentes has audited the companies Águas de Andradina and Águas de Castilho since 3Q11. PricewaterhouseCoopers Auditores Independentes has audited the financial statements of Aquapolo Ambiental and Saneaqua Mairinque since October 2012 and July 2012, respectively. 


Deloitte Brasil Auditores Independentes has audited Sesamm since August 2012, while Attend Ambiental has not contracted any independent auditor or audit service since its incorporation, in 2010.  During such periods, auditors did not perform any services not related to external auditing.  

   

Internal controls    The assessment of internal controls is performed in a structured and systematic manner since 2005, based on the parameters of the Committee of Sponsoring Organizations of the Treadway Commission (Coso) and Control Objectives for Information and Related Technology (Cobit).  The internal control assessment process is annually reassessed considering both the eventual existence of new risks associated to the development and disclosure of financial statements and potential significant modifications in electronic processes and systems.   Tested by a unit not affiliated to the company, controls encompass procedures that ensure the accuracy of accounting records, development of financial statements based on official regulations, and due authorization of transactions related to acquisitions, use and disposal of company assets.  The revision process conducted regarding the efficiency of the internal controls environment in 2011, in compliance with section 404 of the Sarbanes-Oxley law, was concluded in April 2012, not identifying any significant deficiency, similarly to previous years. Tests regarding the fiscal year of 2012 shall be concluded in April 2013. 

   

Risk management 

Information Services (SIC), serving and instructing the general public, receiving and managing information requests, and providing citizens with key information without requiring formal justification.  Within the State Executive Branch, the law was regulated by Decree no. 58.052, from May 16 2012, which presents safe guidelines to organize SICs in all São Paulo Administration entities and agencies, which shall be responsible for "searching and providing" requested documents, data and information.  Decree no. 58.052/2012, which regulated the Information Access Law (LAI) of the State of São Paulo, also revised the attributions of the File Document Assessment Commissions, increasing their scope, redefining their structure and name, which has been changed to Document Assessment and Access Commission (Cada), which must develop a Rating Plan for documents, schedules, as well as confidential and personal information, document and data tables.  The technical activities of each SIC will contribute with document management instruments, which in turn shall communicate with the Integrated Citizen Information System (SIC.SP).  In compliance with LAI, we implemented the SIC, structuring the internal information flow to serve citizens within the terms established by the law, currently developing the documents, data, and information table, defining restrictive information, protecting strategic business information, and striving to promote transparent management.  We have also disclosed basic information required by law and the citizen information request software in our website, based on standards set forth by the São Paulo State Government.  Such attributions are associated to the Risk Management area, which is essentially based   Federal Law no. 12.527/2011 deliberates that on premises such as transparency, information Public Administration entities and agen- quality, and compliance with strategic rules cies must create a unit to render Citizen of a public company. 

  In order to develop corporate governance practices, we systematized corporate risk management by creating procedures for the identification, measurement and treatment of internally and externally generated risks for the organization. One of the main results of such efforts is the creation of a specific risk management unit, following strict independence criteria. The unit’s official implementation is pending approval from government authorities.  Risk management activities are fully aligned with current market requirements, the Sarbanes-Oxley Act, the Code of Best Corporate Governance Practices of the Brazilian Corporate Governance Institute, technical standards such as ABN NBR ISO 31000 – Risk Management – Principles and Guidelines, and other procedures set by the Brazilian Securities and Exchange Commission (CVM), the US Securities and Exchange Commission (SEC), and BM&FBovespa.  In 2012, important investments were directed towards qualifying the professionals in such unit, as well as risk identification and measurement procedures. The company aims at developing risk management activities under a structured focus, aligning the strategy to processes, personnel, technology, and knowledge, in order to manage natural uncertainties faced by organizations and generate value.     

Access to information from public   Sabesp agencies 


49


   

New environmental solutions and businesses    In the last few years, Sabesp has been striving to operate in new markets, other than the stricto sensu provision of water supply and sewage drainage services, expansing its activities abroad and developing solutions that optimize productive processes and contribute to preserving natural resources.  We have established consultancy agreements regarding rational water use and business/ operational management in Panama, where, in partnership with Latin Consult, we serve 68 cities and developed a model to be followed throughout the country by the local concessionaire, Idaan; and in Honduras, where we provide technical support to modernize the water and sewage system. These projects jointly total R$ 11.5 million.  Sabesp also holds partnerships with two state-owned sanitation companies: Casal, in Alagoas, and Cesan, in Espírito Santo. With Casal, the purpose is to mitigate actual and apparent water losses, assisting the company to face intermittent supply. With the company’s interventions, which began in 2009, we managed to reduce all recorded losses in Maceió by 50%. The contract covers R$ 25 million and extends through October 2014. Cesan’s contract covers the installation and customization of the Aqualog software, developed and owned by Sabesp, in the municipality of Nova Venécia (ES). Totaling R$ 1.3 million, installation activities are currently being concluded.  The Sabesp Environmental Solutions platform’s main initiatives are the Pura (Rational Water Use Program) and other activities regarding the production of reclaimed water. Such actions are detailed in the chapter "Reliable water supply in an environment of shortage".  Other environmental solution initiatives are loyalty contracts entered with major clients and consumers, which accounted for an annual


income of R$ 275 million for the company; an increase of 18% compared to the previous year. A total of 144 new contracts were signed in 2012.   Non-domestic sewage treatment arising from productive processes of Sabesp’s customers generated an income of R$ 180 million – a 1% drop compared to 2011. Within this modality, 23.6 million cubic meters were collected and treated in 2012. Also in this context, we expect to operate Attend Ambiental by 2014; a partnership with Estre Ambiental destined to implement and operate a sludge conditioning non-domestic wastewater treatment plant in Barueri, within RMSP.  We are currently working with Alto Tietê cities, in the São Paulo Metropolitan Region, to implement a solid waste handling unit destined for power generation. A regional waste management plan has already been developed, and Sabesp will be responsible for contracting the institutional model regarding the call for submissions to obtain a partner for the project. Also regarding the use of gas generated in sewage treatment processes, the company will develop, along with Comgás, a business model that allows the conversion of the biogas in natura generated by Sabesp (namely in the ABC and Barueri STPs) into biomethane to be distributed among the concessionaire’s pipelines.  Additional information regarding our environmental solution projects are available at sabesp.com.br.      

Research and innovation    2012 was particularly relevant for the company in terms of research, development and innovation investments (RD&I). Total investments reached R$ 6.3 million, well above the historical average and practically two-times the amount spent last year. Such increase stems from projects implemented by Sabesp in search of new technologies that allow the

18%

2011

fleet supplied with biogas

2012

increase of annual revenue   regarding contracts with major  clients and consumers   of R$ 275 million

Learn more at  sabesp.com.br/rs2012

company to produce with greater efficiency, optimize the use of natural resources, and reduce environmental impacts caused by its activities.  One of the RD&I investment drivers is a cooperation agreement established with Fapesp (São Paulo State Research Support Foundation) in 2009. The initial maturity term was 2014; however, we have successfully extended such term to 2019. In 2012, we significantly increased expenses regarding projects promoted by this line, totaling R$ 50 million to use throughout the period, divided in half between the company and the public agency. Of a total of 12 approved projects, nine are currently implemented.  In 2012, we also launched the second call of the Fapesp association. Among the seven investigation and research lines we intend to promote, are the development of sludge treatment, disposal and application from water treatment plants (WTPs) and sewage treatment plants (STPs); monitoring water quality; new technologies to implement, operate and maintain water distribution and sewage collection systems; and power efficiency.   Sabesp implemented Brazil’s first research center dedicated to the environmental sanitation area in São José dos Campos. Currently, eight master’s degree projects are being developed, focusing on the diffuse pollution impacts over the Paraíba do Sul river, as well as the development of specific equipment to automate services. Projects are held in partnership with Ipen (Power and Nuclear Research Institute) and ITA (Aeronautic Technological Institute). The automation of sanitation, water meter reading, and water

Franca STP  1,600 tons of greenhouse gases not released into the atmosphere every year

leak identification services will increase the efficiency of our services. Part of the investments made by the company is being funded by Fapesp.   Sabesp also performs important actions directed towards the use of gases generated in the sewage treatment process, positively reducing greenhouse gas emissions and residues disposed in landfills. By the second half of 2013, we will implement the production of biogas arising from sewage treatment at the Franca STP to supply 49 cars of our fleet, in partnership with the Fraunhofer Institute, from Germany. When the entire production of biomethane is used as fuel, we will have reached a reduction of 1,600 tons of greenhouse gases released into the atmosphere annually.  Among 2012’s accomplishments, it is important to highlight Sabesp’s implementation of a comprehensive technological prospecting study, initially developed in 2010. The first of its kind in the South America sanitation segment, such assessment assists in identifying promising technologies, as well as indicates business and partnership opportunities. As a result, it enhances future estimates regarding activities developed, in line with applicable best practices.  In the intellectual property and rights area, we have six patent applications and ten software products patented. One of such patents addresses the development of a device to wash water reservoirs, capable of reducing the volume of water spent in such operations by up to 90%, in addition to decreasing the time spent. The invention received the Innovation Award, granted by our Regional Systems Board.


51

CARING FOR THE   ENVIRONMENT:   PRESENT AND FUTURE

52

Due to its sanitation business nature, Sabesp believes that contributing to preserving the environment is an integral part of its management process. This commitment is expressed in our Environment Policy, effective since 2008, and is enforced by a committee integrated by representatives from all of our five divisions.

300 multipliers 

trained to meet  ISO 14001  normative requirements 

  goal: over 400 people  by December 2013

R$

26.2 million  paid in 2012  for the use  of water in  federal rivers

We constantly strive to be recognized as an important agent of sustainable development. Based on this goal, we began building our Institutional Sustainability Policy in 2012. We believe that sustainability is the essence of our business. Our activities positively affect public health, socioeconomic and environmental development, and the quality of life of the population we serve.  Among the guidelines established, we intend to incorporate sustainability principles within the strategic planning, investment programs, and all corporate activities, from inception to operation of all systems. Throughout 2012, the minute that establishes concepts, guidelines and competencies of our future policy was submitted to public inquiry and currently awaits deliberation from the Collegiate Board in order to be implemented.  In order to promote sustainable growth, we implemented the Environmental Management System (SGA) in the sewage treatment plants (STPs) and water treatment plants (WTPs), associated to the ISO 14001 certification in strategic operating units. Sabesp’s geographic coverage, different types of employee treatment processes, and different unit scales were considered when selecting such facilities.  The SGA is currently implemented in 62 STPs and 3 WTPs; 50 STPs have the ISO14001 certification. In 2012, we began implementing the system in 30 additional STPs. We are confident that the SGA will be implemented in 129 plants

by late 2013. In the next few years, we intend to continue implementing the SGA throughout our units, covering 302 STPs and WTPs by 2018. Since 2009, Sabesp has already invested R$ 15 million in the system’s development.   Since 2010, we have trained 300 multipliers in order to meet ISO 14001 normative requirements. As the program is implemented, we expect to qualify over 400 individuals by December 2013.  Sabesp operates in the decentralized and integrated management of water resources established in the National Water Resource Policy. Our representation encompasses participation of approximately 150 employees throughout 21 committees of state hydrographic basins, three federal committees within the State of São Paulo, and the Paranapanema River Federal Committee installation support group. We also occupy a chair in the plenary session and some technical chambers of the National Water Resource Board, as well as the State Water Resources Board, in which Sabesp participates in technical chambers as a representative of the São Paulo Water Resource and Sanitation Department.  Collection of water use – management instrument set forth in National and State Water Resource policies, aimed at raising awareness regarding the rational use of such input and funding programs and initiatives in basin plans – is currently being gradually implemented in the State of São Paulo, where Sabesp is the top individual contributor.  In 2012, the company paid approximately R$ 26.2 million for the use of waters in federal and state rivers – initiative launched in 2003, in the Paraíba do Sul hydrographic basin –, launched in 2007 in the same basin and in the Piracicaba, Capivari and Jundiaí river basins. Collection was initiated in the Baixada Santista basin this year, and the following basins are expected in 2013: Alto Tietê, Baixo Tietê, Tietê/ Batalha, Tietê/Jacaré, Baixo Pardo e Grande, Mogi Guaçu, Pardo, Sapucaí Mirim/Grande, Serra da Mantiqueira, Ribeira do Iguape/South Coast, Pontal do Paranapanema and Turvo/Grande. 


53

CARING FOR THE ENVIRONMENT: PRESENT AND FUTURE

Regarding environmental licenses and permits, the current operating park is covered in Corporate Programs to Obtain and Maintain Permits for the Right to Use Water Resources and Environmental Licensing. Regarding permits, the process has progressed based on the plan to complete 100% registered or permitted uses throughout 2013. For new ventures, obtaining licenses and permits is already inherent to its life cycles.  

   

Climate changes and greenhouse gas emission management  EC2/EN18 We are aware of the need to identify possible impacts on our business and we have listed some of the most significant effects of climate change that can interfere directly with our activities. Namely:   • Water availability variations;  • Variations in the extraction, production and transportation of items required in our operations;   • Increase of sea level, with higher risks of damages and impacts in sanitary facilities and increased frequency of extreme events;  EN16 As Part of the Corporate Greenhouse Gas Emission Management Program, currently under development, we reached the goal of completing the 2009 and 2010 corporate inventories in 2012, whose results were respectively 1,804,307.16 and 1,873,729.32 tonnes of CO2eq.  Electrical power (+124%) was the source that most varied in absolute terms for emissions between 2009 and 2010, directly affecting the increase of total company emissions by 4% in the period. Increased emissions, in this case, stemmed from the expansion of the Brazilian energy matrix’s thermoelectric base, which took place that year.  


Also in line with our Corporate GHG Management Program, our strategy aims at mitigating emissions, managing and mitigating potential climate risks, converting them into business opportunities - either through technological innovations, improving the processes' power efficiency, and increasing the company’s ability to adjusted to forecast climate changes.  Some initiatives adopted by the company to mitigate the risks regarding power security are the implementation of a small hydroelectric central and the use of biogas generated from sewage treatment processes. Regarding the water availability reduction risk, some examples of ongoing initiatives are the Water Losses Reduction Corporate Program, Pura (Rational Water Use Program) and the expansion of planned water reuse for urban and industrial purposes.  The renewal of the vehicle fleet is still one of the actions considered to reduce GHG emissions. In 2012, we replaced 105 light vehicles equipped with flex technology, which only used ethanol; 254 trucks equipped with engines compliant with the Euro-5 law, which establishes the reduction of emissions; 28 backhoes and 40 motorcycles. The renewal of our light vehicle fleet has reached 75.3%, while truck replacement reached 48.3%.  Another initiative is collecting carbon via riparian reforestation initiatives in watersheds. A total of 30,000 saplings were planted this year. The Verde Vida project, developed in the Pardo e Grande Business Unit, includes environmental education, riparian reforestation, and, especially, initiatives to preserve and recover the Canoas River, responsible for 80% of Franca’s supply, as well as the Pouso Alegre brook. A total of 92,000 samplings have already been planted (12,000 in 2012), grown in a nursery in the Franca STP.  In 2012, we were unable to proceed with our partnership plans to implement a rotating carbon fund with resources arising from carbon credit sales. The idea may be eventually resumed. 

Fleet   renewal

75% Light vehicle fleet  renewed

48% Truck fleet  renewed

372 tonnes   of recycling materials sent to cooperatives

GRI 4.12/EN18 Sabesp participated in the Carbon Disclosure Project - CDP Investors for seven years. The program encompasses the disclosure of GHG emission data based on a questionnaire developed by the entity, standardizing and organizing the manner through which companies report business information regarding potential risks and opportunities related to climate changes. Associated to such effort, we have integrated the CDP Supply Chain in 2011, but decided not to proceed with such participation in 2012, due to the low adhesion rate of our suppliers.   EN26 In 2012, The State Sustainable Public Contracting Program granted the Socioenvironmental Seal to 37 Sabesp purchase specifications, totaling 208 specifications. We have reached 30% of the established goal – 700 specifications certified – due to the need to implement technical adjustments in the seal issuance process, required by the State Environment Department. Enacted by State Decree no. 50.170/05, the seal indicates to the supplier market the State of São Paulo’s intention to adjust its consumption profile to international sustainable development guidelines. 

• Student and teacher field trips to WTPs and STPs. In 2012, a total of 1,474 visits were performed, covering 56,456 people;  • Lectures in schools, communities and companies. In 2012, we serviced an audience of 165,948 people, throughout 1,516 events.  We have promoted 31 sustainability hearings; two in 2012. We also implemented seven eco-mobilizations this year, totaling 25 mutual-aid groups to collect garbage and plant seedlings in water resource banks, in partnership with NGOs, civil society entities and community leaders.  In 2012, we decided to interrupt the installation of ecopoints in areas next to the company’s main facilities due to difficulties in conciliating available space with the demands of the surrounding community. 

   

Sabesp 3Rs 

  Based on the “reduce, reuse, and recycle” concept, in 2012 the selective waste collection program gathered 372 tonnes of materials for recycling, sent to waste collector cooperatives. The result   represents a 30% increase compared to the   previous year, when a total of 386 tonnes were gathered. Throughout the program, created in 2008, approximately 75 awareness activities, technical visits, specific training and qualification of representatives of the company’s organizational   Sabesp maintains a Corporate Environmental units were performed, covering approximately Education Program (PEA), in which measures 1,200 employees and outsourced service providers.  are developed to build social values, knowledge,   skills and approaches towards a sustainable   world. Since 2007, over one thousand employees were trained to disseminate the environmental sanitation culture. The PEA sets guidelines for over one hundred initiatives and projects, among which are:    • Adoption of the Pura (Rational Water Use Sabesp participates in some environmental Program) in schools, which, in 2012, reduced nature processes within the administrative water consumption in educational institutions and judicial scope promoted by the Public within the city of São Paulo by 72 million liters Prosecutor’s Office, certain municipalities per month;  and non-governmental organizations. Most

Environmental education program 

Environmental processes 

30% increase   compared to   the previous year


55

CARING FOR THE ENVIRONMENT: PRESENT AND FUTURE

related to the disposal of raw sewage in water bodies, indemnities for eventual environmental damages caused, and investments in sewage treatment system facilities.  The company has established commitments and formalized conduct adjustment terms and judicial agreements with the Public Prosecutor’s Office, including such resources in its budget planning.   In October 2012, the Public Prosecutor’s Office of São Paulo filed a civil suit in which it requests the annulment of the agreement entered between Sabesp and the city of São Paulo to provide basic sanitation services; universal sewage collection and treatment in the Capital city by 2018; reduction of Iodine volume produced in WTPs and STPs, among others. The company presented an answer to the interlocutory appeal in 2012, serving the suit in March 2013, deeming remote loss expectations. The amount covered by the suit on December 31 2012 was R$ 11.7 billion. 

Construction works have bee concluded and the STP is currently under pre-operation stage; the green building awaits the Leed (Leadership in Energy and Environmental Design) environmental sustainability seal, granted by the USGBC (United States Green Building Council), based on the set of sustainable solutions adopted.  The new building is located in an area of 19,000 square meters, with a built area of 391 square meters. The remaining 13,000 square meters (70% of the total area) will be occupied by green areas. The construction meets sustainability requirements in six categories: space, rational water use, energy efficiency, natural materials and resources, indoor environmental air quality, and design innovation. The Leed seal certification is expected by June 2013.     

 

Reserves in   protected areas

  Sabesp’s first certified green building should begin operations in July 2013. The administrative building of the Bragança Paulista sewage treatment plant will provide 100% sewage collection and treatment services to the city. 

Sabesp owns and maintains areas within preserve units, performing supervision and monitoring activities, as well as supporting biodiversity studies conducted by universities, such as USP. Research facilities are available, including for night-time fauna observation studies.

 

Green building  

EN11/EN13

Reserves in protected areas  Morro Grande Reserve  (city of Cotia)

Perimeter: 66 km  Area: 10,700 ha  Dams: Graça and Pedro Beicht  Alto Cotia WTP   Note: The current forest reserve (category extinct by the Snuc law) into a Private Natural Heritage Reserve.

Rio Claro Reserve  (cities of   Salesópolis and Bertioga)

Perimeter: 152 km  Area 16,100 ha  Covers the Rio Claro production system  Ribeirão do Campo and   Poço Preto dams.  Casa Grande WTP  Note: Integrally inserted in the Serra do Mar State Park


Capivari Farm  (city of São Paulo)

Perimeter: 12 km  Area: 2,900 ha  Covers the Guarapiranga   production system  Rodolfo José da Costa e Silva   WTP (Alto da Boa Vista)  Note: Integrally inserted in the Capivari-Monos APA. Predominance of pine trees, whose replacement with native plants is being assessed

Solutions for Iodine generated in the water and sewage treatment process

Iodine generation is inherent to sanitation activities. Both water and sewage treatment processes generate residues that require proper disposal, in order to leverage environmental benefits. This is a challenge that Sabesp has attempted to overcome, not only because it is required to do so by society, but also because caring for the environment’s water resources is an integral part of the operations of a company whose main raw material is water.  The Iodine currently generated in our activities is mainly destined to proper disposal in landfills - in counterpart, Sabesp treats the leachate produced in such areas. Since these areas are not sustainable elements in our metropolis and scarcely available in the coast and countryside, we have attempted to develop new alternatives with the purpose of reducing the final volume disposed. Among such initiatives, the most relevant are incineration, considering the energetic use of residues, and composting, producing soil conditioners with agricultural applications. The most promising perspectives lie in the use of Iodine to treat sewage.  Among the initiatives related to this direction, we are currently preparing to transform all of the Iodine produced in the Lavapés sewage treatment plant (STP), located in São José dos Campos, into agricultural compost as of 2013. The bidding process to contract composting services for 70 daily tonnes of Iodine is currently being concluded, allowing the authorization registry in the Department of Agriculture. This compost was classified as "class D"; that is, it is a soil conditioner of organic source that may be applied in certain types of plantations, such as coffee, fruits and sugarcane. It is important to note that the use of Iodine to produce fertilizer allows a reduction of 58% in operating costs regarding Iodine

treatment and final disposal in Lavapés. Within the next few years, we will adopt the same procedure for the Taubaté STP, using 100% of the Iodine generated in the unit’s sewage treatment process, totaling 30 tonnes per day.  In RMSP, the company plans to implement incineration units at the Barueri STP, our largest treatment station, with capacity for 9,500 liters per second. The energy contained in Iodine will be used as fuel in the incineration process, with a portion of biogas produced by anaerobic digestion agents. Surplus biogas may be injected in the public gas system.  By optimizing the treatment process and applying new technologies, the company has also obtained significant results in water treatment plants. In all eight units installed in the metropolitan area, the volume of Iodine generated was reduced by 32% in the last four years. We also decreased the use of chemical products applied in the water treatment process by 10% in the Great São Paulo Area, benefiting the generation of wastewater and Iodine.   It’s important to mention that the company has been sponsoring certain research lines, in association with Fapesp, aimed at reducing and making better use of the Iodine generated in water and sewage treatment processes. This year, we aimed at encouraging, among other guidelines, the use of STP Iodine as a material to cover landfills; use of Iodine removed from stabilization ponds in sewage treatment as degraded area recovery material; and processing sand extracted in STPs to be used in civil construction.

57

SHAPING THE CITIZENS OF THE FUTURE

58

Every new year, Sabesp strives to improve its relationship with its audiences, since such partners (customers, shareholders, collaborators, suppliers, governments and communities) can help the company build a fair organization that promotes inclusion, citizenship and respect for human rights. These are values and practices pursued with the same effort that we employ to reach financial goals and sustainable development, guided by our Code of Ethics and Conduct.

GRI 4.12 Sabesp maintains its businesses in accordance with the UN Global Compact, which gathers companies in favor of human labor rights, environmental protection and anti-corruption principles. The company is a parter of Instituto Ethos, in addition to supporting and promoting the UN Eight Millennium Goals, currently integrated to our Corporate Volunteering Program. We also supported in 2012 Planeta Sustentável [Sustainable Planet], organized by Editora Abril.  Our proposal is to increase engagement and the promotion of quality of life and strategic commitment to operate as an Agent of Sustainable Development. Our activities positively affect public health and socioeconomic and environmental development. Basic sanitation is an essential infrastructure segment for sustainable development. Based on articulated socio-environmental responsibility operations, we also strive to narrow our bond with society in general.   In the social area, through the Volunteering Program, we organize campaigns that gather tonnes of food, clothes, books and magazines, distributed throughout over 200

social entities. We maintain partnerships with NGOs, city halls, schools, among other institutions, building a network of over 1,200 volunteers. During the development of citizenship projects, this group dedicates an average of 10,000 work hours every year solely on solidarity, benefiting over 15,000 people.  Inclusion is present in several of our activities. We focus mainly on children, since we believe a proper citizenship education is paramount to build a fair society. The company operates in social risk areas within the São Paulo Metropolitan Region, through the Instituto Criança Cidadã (ICC), which invests in educating children in low-income families. In 2012, our contribution reached R$ 2.7 million, providing education and assistance to approximately 6,500 children and adolescents, supported by 3.5 million families.  Sabesp is also recognized as a Child Friendly Company by the Fundação Abrinq. It is a formal commitment that expresses, for example, supplier contract items, which guide the production chain, preventing slave and child labor.  The distressing search of families for missing children and adolescents was supported by Sabesp. Every year, at least 9,000 of them never return to their homes in the State of São Paulo. The first step was the integration to the São Paulo in Search of Missing Children and Teenagers Program, organized by the State Government. Then, initiatives were implemented. Water bills, for example, started to promote the program and instruct customers on measures to be adopted in order to overcome this issue. Messages were multiplied throughout the company’s website, in the corporate portal, employee payslips and customer service agencies.   For individuals between 14 and 21, we hold a partnership with the National Industrial Education Service (Senai-SP), through which we allow them to access the company in order to obtain professional information. The initiative has generated opportunities to 2,300 young men and women, 560 of which joined the company’s staff in 2012.


59


Customer relationship

 

  The continuous improvement of our services is part of our strategic planning (2011-2020) and one of the main ingredients of our success. We believe that transparent information and the improvement of tools through which we communicate with our audience further strengthen our goal of constantly providing excellence customer service.  In 2012, the company implemented the braille water and/or sewage bill for visually-impaired customers. The new service stems from the partnership with the Department of Rights for the Visually Impaired. The new bill was developed based on interviews with 400 visually-impaired individuals, during which they pointed our their needs. As of 2013, registered clients will also receive the braille version of corporate documents, such as the annual water quality report, annual debt settlement statement, and the adhesion agreement.  The Virtual Agency, available at the company’s website, was also developed to promote the digital inclusion of visually-impaired users. Since April, the channel is completely accessible, allowing users to check debits, request bill copies and check account history, among other functions. In 2012, 80% of services most requested by customers could not be provided in the Virtual Agency, but this goal is expected to be fulfilled as of the second half of 2013.   The improvement of customer relations is also covered in the customer telephone service, in which 100% of calls are answered within a maximum hold time of 60 seconds. Sabesp performs walk-in service in 391 agencies and stations, 65 in the São Paulo Metropolitan Region and 326 in the São Paulo State countryside and coast. In the metropolitan region, agencies currently have new working hours, implemented since August. In compliance with Arsesp’s deliberation, new working hours were established based on each region’s profile.  


Another initiative aimed at enhancing customer relations was the extension of services via the External Customer Service Technician (Tace) to 100% of municipalities operated by Sabesp. Cities receive consumption reading, issuance and calculation services regarding water and/or sewage services at customer’s homes. Technicians are also qualified to provide clarifications and instruct clients, eliminating the need to visit a customer service agency.  Such need is also prevented with the consolidation of the process that automatically charges or reimburses incorrect payments in future bills. On a monthly basis, the company corrects credits or debits in approximately 30,000 accounts.   EC9 The concern with social inclusion is also reflected in the "social tariff", through which the low-income population is benefited with sanitation services, considerably improving the quality of life within such communities. This benefit is regulated by Arsesp and serves families with monthly income of up to three minimum wages, in addition to considering house size and power consumption variables. Currently, 280,000 households are benefited, compared to 242,000 in 2011. (The figure reported in the 2011 Sustainability Report is incorrect.) Sabesp’s social tariff is one of the lowest fees charged by state-owned sanitation companies in Brazil, with a reduction of approximately 64% of the normal residential tariff.  We have maintained the Actions to Regularize, Integrate and Transform Irregular Areas Project (Paritá), implemented in the East Side of the São Paulo Metropolitan Region. In 2012, approximately 720 water connections in ten areas irregularly occupied were regularized; between 2008 and 2011, 51 additional areas were covered. Within the last five years, we served approximately 20,000 residents. These initiatives also reduced losses of 2.7 million cubic meters of water per year, considered strategic by the company, which operates in areas with extreme water shortage.  Also aiming at supplying such underprivileged areas, the company established a

280 households covered   with social   tariff in 2012

partnership with the São Paulo City Hall, in September, to install fire hydrants and water distribution systems around such communities, in order to assist the fire department. Sabesp had already installed two fire hydrants in the Sônia Ribeiro settlement, in Jardim Aeroporto, which was considered a pilot project. The program encompasses the installation of fire hydrants in 50 settlements, throughout four stages. Planning and execution of works will be performed according to actions required by the city.     

customer satisfaction PR5 Sabesp annually conducts a satisfaction survey with its customers since 2004, always based on the same methodology, which allows comparing different business units in distinct periods. Our goal is to enhance customer services based on the survey’s results.  In 2012, the general customer satisfaction rate was 89%, three percent lower than the previous year. We believe that the maintenance of such result is mainly attributed to the quality and regularity of water supply services rendered by the company: 90% of 5,862 interviewees stated they were "satisfied" or "extremely satisfied" with the service.   Sabesp also began conducting satisfaction surveys in each city in which it holds program contracts. Assessments are performed every two years. In 2012, the survey was conducted in 198 cities. Results guided the improvement of our customer service processes. Surveys are disclosed to the general public,

general customer  satisfaction index regarding Sabesp

89%

further reinforcing our commitment towards transparency and constant improvement of services rendered.     

Ombudsman   

Our Ombudsman Office broadened its structure and the Customer Service Central. This investment allows us to readily service almost all callas made - approximately 99% in up to minute – and, according to our assessment, resulted in a significant reduction of the number of clients seeking services in other institutions, with substantial quantitative and qualitative gains for the company’s image.   The 2012 results indicate a 45% reduction in the total number of clients that filed complaints in the São Paulo State Sanitation and Power Regulatory Agency (Arsesp). Results also indicate an 18% reduction in the number of clients seeking assistance from Procon, the state consumer defense agency. There was also a 3% reduction in the number of clients seeking the Digital Special Civil Court (JEC), which consolidates the successful partnership between Sabesp and JEC.   The search for excellence in customer service can be attested by the fact that 2012 was the third consecutive year in which Sabesp remained outside the list of 50 most complained companies in Procon’s ranking.   GRI 2.10 Market recognition came through the 2012 Brazil Ombudsman award. Organized by the Consumidor Moderno magazine, the award ceremony relied on a jury selected by the Brazilian Association of Client Company Relations (Abrarec) and the Brazilian Association of Ombudsman Offices (ABO). This initiative consolidated the quality of the customer service model employed by Sabesp’s Ombudsman, since it won all categories of the award: 10 Best Ombudsman Offices in Brazil; Top Three Ombudsman Offices; and Top 3 Ombudsman Offices in 2012. 


61


Employee   relationship

 

  Sabesp is extremely proud of its employees, whose qualification is a reference in the basic sanitation segment. The maintenance of such professionals, in a competitive and rising market, keeps the company constantly searching for best personnel management practices. We believe that the combination of such qualified experiences and the search for new talents will leverage the company’s sustainable development.  GRI 2.8 Sabesp currently has 15,019 employees under the Brazilian Labor Laws (CLT). Most are Caucasian (83%) males (80%), with middle school education (49%) and over the age of 40 (71%). The average employment span in the company is 17 years.  

15,019

Sabesp hires services providers as required. Under such conditions, the company operates with approximately 7,372 professionals. Additionally, we employ 888 interns and 560 young apprentices, which combine the job opportunity with qualification courses.  Valuing diversity and social inclusion are essential building blocks of a fair and sustainable society. Sabesp complies with Federal Decree no. 3.298, from 1999, which determines the offering of 5% of job positions offered in public selection processes to individuals with disabilities. In 2012, we had 64 job positions occupied under such conditions, 69% by physically-impared 22% by hearing-impaired, and 9% by visually-impaired employees.   Since 2005, we have maintained a partnership with the Association to Value Individuals with Disabilities (Avape), through which 106 disabled individuals operate in our customer service stations, an activity for which they receive over 108 hours of prior training.

80%

49%

male

middle school

83%

71%

Caucasian

over the age of 40

employees


number of employees per region

LA1

  TOTAL 

TOTAL 

2010 8,371

1. RMSP, Vale do Paraíba and Baixada Santista

2011 10,745

8,119

2012

2,367

10,486

8,777

2,569

11,346

4,027

558

4,585

3,849

561

4,410

3,224

449

3,673

12,398

2,932

15,330

11,968

2,928

14,896

12,001

3,018

15,019

2. Regional systems, except Vale do Paraíba and Baixada Santista Total

2,374

TOTAL 

  Notes: Sabesp hires its employees via civil service examinations, as established in the 1988 Federal Constitution, which details positions, requirements, region, positions and wages. A total of 76% of our managers currently work in Region 1, and 24% in Region 2.   Sabesp does not directly hire outsourced employees. It enters service agreements in which such professionals are assigned as required. Under this conditions, Sabesp works with approximately 7,300 professionals, which are not registered under Sabesp’s database EC7

 

Employee distribution per gender and ethnicity

 

LA13

TOTAL

Caucasian African Brazilian Asian Indigenous Not declared Total

 

2010

2011

2012

%

2010

2011

2012

%

2010

2011

2012

%

10,370

9,952

9,889

66%

2,509

2,487

2,540

17%

12,879

12,439

12,429

83%

1,833

1,808

1,870

12%

317

329

357

2%

2,150

2,137

2,227

15%

173

184

202

1%

104

110

116

1%

277

294

318

2%

4

6

7

0

0

0

0

0

4

6

7

0

18

18

33

0

2

2

5

0

20

20

38

0

12,398

11,968

12,001

80%

2,932

2,928

3,018

20%

15,330

14,896

15,019

100%

 

 

Employee distribution per job position, gender and ethnicity

LA13

 

MANAGERS

College Students

2010

2011

2012

2010

2011

2012

2010

2011

2012

2010

2011

2012

CAUCASIAN

417

441

450

117

108

111

1,527

1,448

1,493

835

824

827

AFRICAN BRAZILIAN

17

19

17

5

3

4

128

134

139

84

86

86

ASIAN

17

19

18

2

2

2

87

92

96

54

59

60

INDIGENOUS

0

0

0

0

0

0

0

1

1

0

0

0

NOT DECLARED

0

0

0

0

0

0

3

3

4

0

0

0

451

479

485

124

113

117

1,745

1,718

1,733

973

969

973

TOTAL

  Operating

Administrative/Technical

2010

2011

2012

2010

2011

2012

2010

2011

2012

2010

2011

2012

3,982

3,857

3,750

1,492

1,485

1,485

4,444

4,166

4,196

65

70

117

AFRICAN BRAZILIAN

663

664

671

206

216

227

1,025

991

1,043

22

24

40

ASIAN

55

60

65

48

48

52

14

13

23

0

1

2

INDIGENOUS

2

2

3

0

0

0

2

3

3

0

0

0

NOT DECLARED

5

5

10

2

2

4

10

10

19

0

0

1

4,707

4,588

4,499

1,748

1,751

1,768

5,495

5,183

5,284

87

95

160

CAUCASIAN

TOTAL

 


63


Employee distribution per job position category Employees per category

 

LA13

2010

2011

575

592

602

College Students

2,718

2,687

2,706

Adm./Technicians

6,455

6,339

6,267

Operational

5,582

5,278

5,444

Subtotal

15,330

14,896

15,019

Interns

1,056

918

888

548

506

560

16,934

16,320

16,467

Managers

Apprentices Total

2012

  Employee profile – Per age, time of service, education, working hours, management and gender TOTAL 

LA13

 

TOTAL 

2010

TOTAL 

2011

2012

age

0

0

0

0

0

0

0

0

0

between 18 and 30

657

259

916

649

289

938

743

327

1,070

between 31 and 40

3,016

755

3,771

2,775

710

3,485

2,589

705

3,294

between 41 and 50

4,507

1,173

5,680

4,434

1,164

5,598

4,498

1,137

5,635

Over 50

4,218

745

4,963

4,110

765

4,875

4,171

849

5,020

45.7

43.8

45.3

45.8

43.8

45.5

45.9

43.9

45.5 2,599

Up to 17

Average age SERVICE TIME Up to 3 years

1,109

254

1,363

1,470

399

1,869

2,028

571

4 to 10 years

1,754

443

2,197

1,240

331

1,571

764

194

958

11 to 20 years

4,771

1,204

5,975

4,962

1,204

6,166

5,262

1,301

6,563

Over 20 years

4,764

1,031

5,795

4,296

994

5,290

3,947

952

4,899

17.3

16.7

17.2

17.1

16.4

17.2

17

16.3

16.9

Average service time EDUCATION Primary School

2,187

42

2,229

2,179

53

2,232

2,198

101

2,299

Middle School

6,318

948

7,266

6,233

1,097

7,330

6,164

1,121

7,285

College(1)

3,893

1,942

5,835

3,556

1,778

5,334

3,639

1,796

5,435

WORKING HOURS Part-time(2) Full-time

1,265

250

1,515

1,254

266

1,520

1,224

261

1,485

11,133

2,682

13,815

10,714

2,662

13,376

10,777

2,757

13,534

MANAGER Not commissioned Commissioned

0

0

0

0

0

0

0

0

0

451

124

575

479

113

592

485

117

602

11

5

16

14

1

15

14

1

15

3

0

3

3

0

3

3

0

3

Governance divisions Board of Directors and Board of Auditors

Audit Committee

  1,806 professionals have post-graduate specialization courses/MBA, 9.3% of which hold master’s degrees or PhD  (1)

(2)

Work in operating and customer service areas 

Ratio between the lowest wage and minimum wage - overall Lowest wage* (R$) Minimum wage (R$) Ratio (%)

LA14

 

2010

2011

2012

754.49 510 148%

814.85 545 150%

1,100.75 622 177%

* Lowest starting wage, paid to the Environmental Sanitation Agent I position. There is no difference in the base salary between men and women


Ratio between the lowest wage and minimum wage - per region

EC5

 

2010

2011

2012

1. RMSP, Vale do Paraíba and Baixada Santista (R$)

905.40

977.84

1,320.90

2. Regional systems, except Vale do Paraíba and Baixada Santista (R$)

754.49

814.85

1,100.75

510

545

622

1. RMSP, Vale do Paraíba and Baixada Santista

178%

179%

212%

2. Regional systems, except Vale do Paraíba and Baixada Santista

148%

150%

177%

Lowest wage

Minimum wage (R$) Ratio

Note: There is no difference in the base salary between men and women 

   

Job rotation – total, per gender, age range and region

LA2

 

TOTAL 

TOTAL 

2010 5.9

5

between 20 and 40

4

between 41 and 55

5.1

Over 55

TOTAL 

2011 5.8

7.7

7.2

4.3

4.7

6.1

4

3.4

4.3

2.9

1.9

18.8

RMSP

6.6

4.8

Countryside and coast

5.1

5.3

Gender

(%)

2012 7.6

5.5

4.4

5.3

6.9

6.2

5.1

5.6

5.2

5.9

4.7

3

2.6

3

24.4

17.7

23.2

15.3

10.8

14.7

13.5

8.1

6.8

9.6

5.4

4

5.1

11.5

7.3

8.1

5.6

5.6

5.3

5.6

Age range

Region

Company total

5.9

5

5.8

7.7

7.2

7.6

5.5

4.4

5.3

Hired employees

7.2

6.7

7.1

4.3

7.2

4.9

5.8

7.2

6.1

 

LA3 Sabesp adopts a set of benefits that contributes to improving the quality of life and well-being of its employees, resulting in enhanced performance and rationalization of benefit management. The benefit package adopted by the company includes: Benefit Card – Basic Food Basket and Discounts at Supermarkets and Pharmacies, and Meal Voucher. These benefits are provided to all employees, regardless of working hours, position, gender or ethnicity. Except for apprentices, whose benefits are governed by specific laws.  Employees with legal custody of children are granted a childcare allowance or can use our Daycare Center, for children from six months to less then six years old. We reimburse the expenses incurred by employees with physically or mentally disabled children on their treatment in specialized institutions equivalent to up to two times the amount of

the childcare allowance, with no age limit. Employees on sick or accident leave paid whose salary is higher than the ceiling allowance established by the public social welfare are automatically granted a salary supplement during up to six months.  EC3 In addition to these benefits, we also subsidize healthcare and pension fund benefits for all employees, through Fundação Sabesp (Sabesprev). In 2012, we contributed with 1.8% of monthly payroll to the employees’ defined benefit pension plan.  In late December 2011, we entered into an agreement with the entities representing the employees to make changes in their pension plan. The proposal provides for the increase in the incentives granted to those employees willing to migrate from the defined benefit pension plan (Basic Plan) to the defined contribution plan (Sabesprev Mais Plan). It also incorporates changes in the risk benefits. 

The same benefit package is provided to all employees, regardless of working hours, position, gender, or ethnicity.


65


‘Viver Feliz’:  actions to  improve  employee health

With the agreement, we expect to address the basic pension plan’s technical deficit issue, estimated at R$ 557 million. The solution still need to be approved by the State Government oversight bodies and will also be submitted to the approval of courts, due to the lawsuit that in November 2010 suspended migrations to the Sabesprev Mais plan. In September 2012, the judge ruling the case determined the execution of a financial audit process. An auditor was assigned in early 2013.  As regards the healthcare plan Sabesprev, in 2012 the National Supplementary health Agency edited a normative resolution that regulates the offer of healthcare plans to former and retired employees, which interrupted the activities of the joint committee to define proposals to improve plan coverage. Assessments will be resumed in 2013.  Under the purpose of "building a work environment with productivity, quality of life and well-being, contributing to reducing absenteeism and improving the organizational environment," in 2012, the Viver Feliz [Happy Life] program conducted initiatives regarding healthy eating and physical exercise, since obesity and sedentary lifestyle were identified as the main risk factors for employee health.  Sabesp took a qualitative leap in the fulfillment of its corporate guidelines: "human

capital as a competitive force". The company employed all efforts to seek a people management system that allows restructuring the organization based on their needs, qualifying them for new challenges and rewarding performances. Some of the main 2012 people management projects are the implementation of the new Charge and Salary Plan (PCS), the Performance and Competence Assessment System, and the Management Excellence Program, in addition to the automatic replacement of employees.  One of the goals of the new Charge and Salary Plan is to reward professional development, instituting a meritocratic system. In order for the company to maintain its competitive edge and retain its talents, salaries were adjusted based on the market, enhancing early and late career remunerations. Investments were made in budget resources related to promotions, covering a greater number of employees.  Sabesp also implemented a new Competence and Performance Assessment System, designed to allow managers to have a diagnosis of their units, evaluating the performance and skills of employees and establishing development commitments throughout the unit. The company also began immediately hiring candidates approved in civil service examinations. 

2011 final PSP payment distribution  Professional category

Average* (R$)

Operational

2,343.64

Adm./Technicians

3,121.87

college students

5,416.37

managers sabesp average

10,848.76 3,584.70

* Calculation formula: VPPR = {R$ 1,143.91 + [70% x (base sal. + function bonus and commission + ATS)]} x % target


We have leveraged the development of our leaders by implementing the Management Excellence Program, encompassing development activities based on results-oriented management: attendance course focused on several business management segments, lectures with renowned professionals, managerial profile assessment and coaching. Throughout the year, we have benefited 240 leaders in all five divisions. In the next two years, the program will be extended to all employees in leadership positions.  The perception of organizational environment management was assessed by 14,185 employees, within the competence and performance assessment process, who rated the following aspects with grades from zero to five: work environment (4.27); communication (3.99); work conditions (3.91); institutional aspects (3.99); activities (3.92); and recognition/appreciation (3.27).   In addition, a more comprehensive census survey shall be conducted in 2013, with the steady purpose of consolidating the company as one of the best companies to work for in the near future. LA4 Sabesp supports and encourages its employees to participate in entities and associations, in addition to assisting in their individual development and overall organizational environment. All of our collaborators have complete freedom to

LA10

affiliated themselves to union entities, establishing collective bargaining agreements.   The company negotiates with responsibility and transparency, valuing healthy debates with union entities. Eventual meetings are held to discuss reasonable proposals in order to meet employees' expectations and maintain a positive work environment, based on its financial capacity and government guidelines. In 2012, there were no scenarios in which such freedom of affiliation and negotiation was compromised. HR5 Sabesp annually negotiates with the five main union entities representing most (90%) of its employees: Sintaema, Sintius, Seesp, Sasp and Sintec. It is important to note that 80% of our employees are spontaneously affiliated to one of these entities. LA4   The 2012/2013 collective bargaining process occurred in May, involving the main union entities. Negotiations established an adjustment of 6.17% in salaries and benefits, as well as the Profit Sharing Program (PSP). As agreed upon with unions during the 2011 collective bargaining, final 2011 PSP payments occurred on 04/26/12. A total of R$ 53 million was distributed among 100% of the staff.  LA12 In 2012, a regular performance and competence assessment was held for 11,348 male employees and 2,837 female employees. The remaining 834 employees were not evaluated

Qualification – average of hours per functional category in 2012  TOTAL   Category Adm/ Technical

44.2

61.2

49

Apprentice

77.5

75.6

76.8

Intern

77.1

83.8

80.5

Management

50.4

58.6

52

Operational

29.7

37

29.9

College Student

61.3

82.7

69

Total

42.9

69.4

48.8


67


for the following reasons: disability retirement, admission in less than three months, or because they were attending other entities. A total of 1,873 personnel transfers were performed, encompassing promotions, transfers, designation and destitution of positions.  Sabesp complies with Brazilian laws that protect employees, preventing changes that affect their work conditions. In case of process changes that affect the labor relationship, the company previously discusses such matters with employee representatives.  The sustainability of our business depends on those who will take on leadership positions within the company in the medium and long terms. This is even more pressing based on the fact that 35% of our managers will be eligible for retirement in the next five years. In 2012, we created the first class of the Career and Succession Preparation Program, with a total of 39 professionals.   We also began qualifying 45 other employees who indicated essential and potential skills to become future Sabesp leaders. The development process includes MBAs, coaching, assessments, personal development and language courses, national and international, regarding business priority issues.   LA11 The training and qualification process of our employees has always deserved special attention. Sabesp is a pioneer in corporate education in Brazil, with the incorporation of its Business University in 2001 to qualify leaders and employees in all levels. The university’s investments hover around R$ 12.8 million, prioritizing courses mainly focused on sustainability, corporate governance, environment, social responsibility, quality, health, and safety.  HR3/HR8 In 2012, substantial investments were made in occupational hygiene, health and safety training activities, including human rights aspects. Courses totaled 25,000 hours of social responsibility training, covering over 4,000 employees. In addition, occupational health and safety programs, which also cover human rights themes, covered 42,000 employees, totaling 134,000 hours. 


The company also focused on qualifying its professional staff, subsidizing post-graduate, MBA, technical-professional and language courses, through partnerships with renowned market institutions. Additionally, partnerships with over 135 educational institutions provided discounts of up to 40% to employees and dependents in graduate, post-graduate, basic and middle school, technical, child education, language, and literacy courses.  The purpose of the company’s occupational health and safety management is to ensure actions that promote a preventive culture throughout the company, improving work conditions, ultimately leveraging the quality of life of employees and service providers.  PR1/PR2 Sabesp’s Occupational Health and Safety Management System is certified by the OHSAS 18001 standard, covering 72 establishments within the scope of excavation services and works in confined areas executed in public roads, re-certified by Bureau Veritas in 2012.  LA6 25% of the total staff works in formal health and safety committees, engaging in activities such as: systematization, monitoring, and specific programs. Special emphasis goes to the efforts and commitment of 4,000 Internal Accident Prevention Committee members, emergency brigade members and professionals in Specialized Occupational Health and Safety Engineering Services.  Formal health and safety committees receive the following attributions:  • Regional Cipa Committee - operates within the Business Unit, comprising presidents and vice-presidents of the Business Unit’s Cipas;  • Institutional Cipa Committee - responsible for the mediation between Regional Committees and Functional Authority, co m p r i s e d o f a p re s i d e n t a n d v i ce president representing each Regional Cipa Committee;  • Regional Brigades Committee – operates within the Business Unit, comprised o f m a n a g e rs a n d v i ce - m a n a g e rs o f Business Unit emergency brigades, as

well as occupational safety professional representatives servicing the Business Unit;  • In s t i t u t i o n a l B r i g a d e C o m m i t t e e – responsible for the mediation between Regional Committees and the Functional Authority, comprised of a manager and vicemanagers of each Regional Committee’s emergency brigade, as well as occupational s a fe t y p ro fe s s i o n a l re p re s e n t a t i ve s servicing the Business Units.  Occupational health and safety programs resulted in a gradual reduction of accident frequency and severity. The most frequent accidents occur in traffic (28%), falls (24%)

Occupational health and safety indicators – per region

LA7

and collisions against moving or fixed objects (18%). Human behavior (68%) is the main factor behind accidents due to overconfidence and noncompliance with safety procedures.  This year, we have invested approximately R$ 12 million in accident prevention measures. The main programs are: Cipa em Ação (identifying 1,047 unsafe conditions, 75% concluded); Campanha Segurança Nota 10 (3,904 inspections concluded); Capacitação de Saúde e Segurança do Trabalho (40,000 participants) and Minuto da Prevenção (2,460 events, with 39,338 participants); Campanha Você no Trânsito: Prevenção de Acidente

 

TOTAL 

TOTAL 

2010

TOTAL 

2011

2012

Sabesp Frequency rate

7.2

3

6.4

8

2.9

7.1

6.2

1.7

5.4

Severity rate

814

63

682

365

189

334

209

20

175

58

13

71

103

16

119

5

1

6

2

0

0

1

0

Occupational disease

3%

Absenteeism Death

2

0

3%

2%

0

1

Region 1 (RMSP, Vale do Paraíba and Baixada Santista) Frequency rate

6.6

2.9

5.8

8.3

3.4

7.3

5.1

2.1

4.7

Severity rate

657

44

532

298

140

266

150

25

124

10

52

81

16

97

0

0

0

Occupational disease

42

3%

Absenteeism Death

1

0

3% 1

0

3%

0

0

1

0

0

0

7.7

Region 2 (Regional systems, except Vale do Paraíba and Baixada Santista) Frequency rate Severity rate Occupational disease

8.3

3.6

7.8

7.3

1.1

6.6

8.6

1,145

149

1,038

506

402

495

335

0

296

16

3

19

22

0

22

5

1

6

3%

Absenteeism Death

1

0

2% 1

0

2%

0

0

0

0

0

  Definitions:  Frequency rate: number of work-related accidents resulting in injuries and leave of absence per million of man-hours worked, per year  Severity rate: days lost to work plus days debited from work-related accidents per million of man-hours worked, per year  Occupational disease: number of employees on leave due to disease associated with or caused by the performance of a certain activity The 2010 and 2011 values include cases of conversion from common disease into occupational disease, as per INSS, due to the technical-epidemiological nexus defined by the entity. Official data regarding conversions occurred in 2012 still has not been disclosed by the INSS  Absenteeism: percentage that measures the decrease in the total number of hours worked due to absence from work.


69


com Motociclistas; Controle Médico de The Sies will combine the financial, accounting, Saúde Ocupacional (11,645 medical exams); human resources, legal and acquisitions/procureCampanha de Imunização (11,343 employees ment areas within a single platform. Known from vaccinated against the flu).  the Enterprise Resourcing Planning (ERP), the integrated system will increase corporate operation efficiency, expediting the decision-making process.  The implementation of the Sies project has already started and should be concluded with  in 40 months. The process will be impleSabesp’s knowledge management promotes mented in two stages: implementation of the assimilation and sharing of experiences, administrative and financial macroprocesses ideas and values, contributing towards the by 1Q14, and business macroprocesses by development of human capital, adding value the end of 2014.  to the business, and promoting management   excellence.     Among its practices is the Knowledge Database, Specialty Database, External Event and Trip Reports, Virtual Community, Sabesp Wiki (internal encyclopedia), Corporate Blog, Virtual Spaces (areas restricted to work   groups), Electronic Document Management Our relationship with suppliers is based on (MaxDoc), Narratives (videos addressing ethics, transparency, and social and envitechnical-operational activities), and the ronmental criteria, reasons for which we Knowledge Repository.  encourage companies with which we hold Another 2012 highlight was the production business relations to adhere to greenhouse of 75 articles under the theme "Sanitation gas emission reduction and management Innovation", focused on water, sewage and envi- practices. In our electronic bidding portal, ronment, which were submitted for evaluation available on the company’s website, we and the three best articles were recognized disseminate contests held by the company, abroad in the 2012 International Symposium ensuring equal participation conditions to on Sanitary and Environmental Engineering all suppliers.   We are the first company in Brazil to imple(Sidisa), ranking between fourth and eighth places, with courses or congresses in national ment an electronic acquisition process. In territory, as well as the digital publishing of an addition to reducing costs, the system proe-book with 15 articles.  vides transparency, efficiency and agility to   suppliers and customers. A total of 1,869   electronic floor trades were performed throughout the year, totaling R$ 1.6 billion, saving R$ 296 million for the company.    Sabesp promotes the participation and 2012 was extremely important for Sabesp hiring of local suppliers within its operating within the corporate sustainability path. We region. Our business units have separate employed best efforts to leverage the trans- budgets and autonomy to contract suppliers parency and reliability of our internal man- in a decentralized manner.  agement process. For such, we conceived the EC6 In compliance with the extensive periphSabesp Integrated Reporting System (Sies), eral legislation regarding contracts, special designed to increase the reliability of pro- treatment is provided to micro and small companies, as well as cooperatives, also cesses and reduce costs. 

Knowledge management 

Supplier   relationship 

Corporate management 


  encouraging the contracting of local suppliers. In 2012, such participation – considering only bidding-exempt contracts by value and invitation – reached 35%.  Sabesp promotes as much advertising as possible in the market regarding its acquisition plan, with the purpose of stimulating competition. We have developed the Public Acquisition Competition Guidelines manual, available at sabesp.com.br, in which we establish general guidelines to broaden the scope of suppliers and promote greater competition. In compliance with State Decree no. 53.336/08, Sabesp also discloses its Sustainable Public Contracting Report, which lists our main social and environmental actions and best practices applied to our supply chain.  HR1 Contract minutes and notes also include social and environmental aspects, namely:  • Participation conditions: companies currently restricted by environmental crimes as per the terms of article 10 of Law no. 9.605/98, which addresses penal and administrative sanctions arising from conducts and activities harmful to the environment, are expressly prohibited from participating in Sabesp’s bidding processes;  • Child labor prevention: bidders must submit a statement indicating no pending issues in the Department of Labor; HR6   • Statement indicating the absence of any type of work similar to forced or slave work, in any of its forms, throughout the productive chain; HR7  • Wood products and byproducts: bidders must submitted a statement indicating that only wood products or byproducts of exotic or native origin legally permitted by State Decree no. 53.047/08 shall be used to execute engineering services and works;  • Normative Qualification Guideline: Sabesp seeks suppliers committed to the environment and its surroundings. It also requires compliance with local environmental laws through installation and operation permits issued by environmental agencies. Additionally, it assesses the toxicology risks of products, ensuring safe use both in treatment plants and end consumers. 

Investor   relations    Our Investor Relations area operates with transparency, providing clarifications and solving doubts regarding company-related issues, and conveys market demands to top management. Thus, we render information in a democratic fashion, allowing all stakeholders to be adequately fit to make decisions based on the same knowledge.  Throughout 2012, the company participated in 11 conferences and roadshows in Brazil and abroad, in addition to dozens of individual meetings in our headquarters. The reflected quality of such relations was evidenced during the debenture offering performed in January 2013, when demands reached approximately four times the offered value. The tariff revision process conducted by the Regulating Agency was one of the main reasons behind many of the meetings held throughout the year.      GRI 4.4

Relationship with governments   

We constantly strive to achieve excellence in government dynamics. Our public segment interfaces encompass all three political-governmental levels (Union, States, and municipalities), its agencies and entities. We collaborate with the processes of developing and implementing public policies in the segment, among other initiatives of social interest, directed towards improving quality of life, for which basic sanitation is an essential element.  Within the federal scope, in 2012, we participated in a public inquiry related to the proposal of a new National Basic Sanitation Plan; additionally, we reduced the significantly high tax rates applied over water and sewage services, along with sanitation segment representative entities. In 2012, Sabesp paid


71


R$ 1.34 billion in income tax, Pasep, Cofins, and CSLL, which represents approximately 53% of investments performed in the year.   Within the State scope, the company participates in several programs and definition of guidelines for the sanitation segment, with the purpose of expediting the universal services goal. We also assign resources to State Government initiatives, such as those promoting culture and sports, based on tax incentives.  Interactions with municipalities are extensive, based on the conditions of our main customers. We strive to understand and fulfill local demands, participating in the most relevant discussion forums, and support several programs and initiatives in the environment, health, sports, and culture areas, based on tax incentives. 

   

Community relationshiP   Sabesp constantly supports educational activities focused on customers, suppliers and communities. We have stood out in training activities regarding the rational use of water and environmental education. In 2012, we technically and financially supported a healthy competition conceived by Sagarana Comunicação. Employees and residents of 15 residential buildings in the Moema district, on the South side of São Paulo, participated in the Condominium Contest, whose challenge proposed was to save water.  During two months – June and July – the efforts of all 15 buildings saved 1,894,822 liters of water, which corresponds to 190 water trucks with capacity for 10,000 liters each. The Ponte di Rialto building won the competition, saving 200,000 liters of water and reducing overall consumption by 14%.  SO1 Sabesp also operates in communities in partnership with local city halls. Programs focused on low-income populations include technical and social activities


aimed at promoting the socioeconomic and environmental sustainability of ventures, encompassing community engagement and environmental education, based on the characteristics of works and the profile of the audience benefited.  One of the main methodologies is the Collaborative Governance, developed by the Brazilian Center of Analysis and Planning (Cebrap) and employed, for example, in programs such as the Córrego Limpo [Clean Brook] by the Metropolitan Board. In this approach, social and environmental projects are maintained with engagement of all interested parties, and the beneficiaries are monitored and supported by the company’s social responsibility teams.  I n R M S P, S a b e s p a l s o d eve lo p s t h e Agente da Gente [Our Agent] - Community Engagement Program, through which we establish an efficient communication channel between our 40 community technicians and local community leaders. They work together to engage the residents, transforming them into multiplying agents of environmental awareness. In 2012, over 1.6 million were served, including participation in lectures and events related to sanitation.  The company constantly seeks methods to bring its professionals closer to the communities where they operate. One of the efforts has been to perform services through own workforce, a model adopted by the Regional Systems Board. Named Gente Que Faz [Hands-on People], it also addresses a strategy that seeks to value the staff and add value to the company’s results.  GRI 4.15 The company is open and seeking to establish new connections with stakeholders in different segments, but it adopts specific criteria regarding such partnerships, in order to generate benefits to our business and mission. Therefore, the assessment for sponsorships, institutional support and cooperation terms is based on the following criteria: (i) prioritizing entities/headquarters/operation in the operated base; (ii) initiatives associated to water and sustainability (e.g. water sports); (iii) allow social engagement and inclusion; (iv)

Financial aid received   from governments EC4   integrity, history of activities and compliance with applicable laws to provide support from state-owned companies. We also establish agreements through bidding processes with Oscips, NGOs and universities for eco-social projects, as per Law no. 8.666/93. 

TOTAL INCENTIVES

(R$ thou)

2012

Cultural incentive - Rouanet Law

9,280

Audiovisual incentive

4,672

Sports incentive

2,872 3,000

Condeca

19,831

Total

   

Incentives to Culture and Sports    We grant institutional and financial support to environmental, sociocultural and sports projects developed by organizations dedicated to environmental preservation and aligned with social responsibility principles, cultural incentive and community welfare. We believe that practicing social and environmental responsibility is respecting life in its wide array of needs. Among which is culture and its different forms of expression.  One of our initiatives is the Sabesp Para Quem Tem Sede de Cultura [Sabesp For Those With a Thirst For Culture], through which we sponsor cinema, literature, visual arts, music, dance, theater, circus and preservation of cultural heritage projects. In 2012, we invested R$ 13.9 million, R$ 4.6 million of which are part of the São Paulo Cinema Incentive Program, which encompasses 15 films and documentaries. The films were selected by the State Cultural Department and received resources provided by Sabesp via the Audiovisual Law. As required by Sabesp, as of 2012, each production provided a version adapted to visually and hearing impaired individuals, through captions and audio-description, an initiative which we have pioneered.  Since 2004, when the company joined the program, 141 films have already been sponsored, allowing the company to be recognized as a top investor in the São Paulo State cinema segment, and one of the top three investors around the country.   Another initiative is the Escola no Cinema [School in Cinema] project, destined to enhance

the relationship between students and teachers: 20,000 students have already watched commented sessions at Cine Sabesp, one of the last street movie theaters in the capital city, currently maintained by the company. In 2012, the program services 5,000 children.   We consider contributing to the release of the Online Cultural Accessibility Guide to be very important, since it offers information on cultural public equipment available in the capital city. Developed by Instituto Mara Gabrilli, in partnership with the State Cultural Department, the guide lists 186 establishments such as theaters, museums, cultural centers, shows, libraries and movie theaters, among which is Cine Sabesp. The guide is available at acessibilidadecultural.com.br.  Sabesp also promoted sports projects, directing R$ 2.8 million under tax incentives in 2012. Among the beneficiaries are the Clube Pinheiros swimming team athletes. An additional R$ 3 million was directed by the company to the State Fund for Child and Adolescent Rights, through Condeca.     

Awards received by Sabesp  GRI 2.10 In 2012, the company’s effort to further enhance its operation, developing best management practices, broadening services scopes, and adding value to society were recognized through 18 awards received throughout the year, available   at sabesp.com.br/rs2012/premios


73


Lessons taught and learned In 2012, 8,604 people participated in lectures and programs, through which Sabesp seeks partners to help the company strengthen its environmental commitment.  The Educational Learning Program, for example, is open to schools, universities, NGOs, domestic and foreign companies, investors, among several others. The program allows visitors to learn more about two water treatment systems. The Cantareira, one of the largest water production systems in the world, comprised of six dams connected by 48 kilometers of tunnels, is responsible for supplying water to almost 50% of the São Paulo Metropolitan Region (RMSP), which concentrates approximately 20 million people. The other system is Alto Cotia, responsible for supplying the western region of RMSP.   This year, our facilities received 5,720 people in 164 visits, including representatives of international institutions such as the Franklin Templeton Inv-US, Explorador Capital, Mirae Asset Global Investments, CSHG, Crédit Agricole/Amundi and J.P. Morgan. In addition to showing how water is produced in these systems, our technicians address important subjects such as global water shortage and the need to use such resource rationally. Since its implementation, the Educational Learning Program has already hosted over 900,000 people.  EC8 Another important initiative is the visitation program to the Jales STP; a partnership between Sabesp,

74

universities, schools and NGOs. Over 130,000 native and fruit-producing species have already been planted throughout 80 hectares. In addition to learning more about the sewage treatment process, the population enjoys the beautiful themed gardens, the seedling nursery, trails and the fishing tank. In 2012, we received 2,344 visitors, in addition to students from 41 schools of the region. In partnership with the local Santa Casa, we also developed the Nasce uma Criança, Plante uma Árvore [Plant a Tree for Every Child Born] project. In 2012, we planted 1,910 seedlings.  Between January and July, 609 employee relatives between the ages of 7 and 14 participated in the Um Dia na Sabesp [A Day at Sabesp] program. The children learned how water and sewage are treated in the company where their relatives work.   The children’s reactions indicate that the company in on the right path by opening its doors to society, searching for partners to raise awareness regarding the importance of basic sanitation, preserving our water resources, and clearly showcasing the company’s constant strive to achieve excellence. After participating in one of the visits, Juan Silva Garcia, age 7, jumped in his father’s car and immediately started to share a lesson he learned regarding water treatment: “Did you know that water is treated with aluminum sulfide, lime and chlorine?”. 

“When I learned how water is treated, I decided that I wanted to be part of the staff,” said Ana Stela. “Water is a limited resource that we must preserve.” Also as part of the program, the children went to Cine Sabesp to watch Dr. Seuss’ The Lorax, addressing the importance of preserving nature. Watching the free animation film was not a privilege granted only to employee relatives. In partnership with the Escola no Cinema [School in Cinema] project, we distributed 5,000 tickets to basic and middle school students, from public and private schools, to see the story inspired by the American cartoonist and writer Dr. Seuss’ book.  Sabesp’s initiatives also encouraged several visitors to work for the company. That was the case of civil

engineer Ana Stela Barcelos Ferreira de Sá, after visiting the Guaraú WTP, one of the largest water treatment stations of the world: “When I learned how water is treated, I decided that I wanted to be part of the staff,” said Ana Stela. “Water is a limited resource that we must preserve.” After participating in two civil service exams, in 2012 the engineer celebrated one year working in Sabesp’s Equipment and Material Procurement Department. She is responsible for acquiring inputs to treat the water that Sabesp distributes to all of its 27.7 million customers.

75

Annual Social Balance Sheet / 2012 2012 (R$ thou)

2011 (R$ thou)

Net revenue (NR)

10,737,631

9,927,445

Operating profit (OP)

2,843,343

2,354,495

1 - Calculation basis

Gross payroll (GP)

1,498,445

EN30

1,395,844

2 - Internal social indicators

R$ thou

% on GP

% on NR

R$ thou

% on GP

% on NR

Meals

118,368

7.90

1.10

109,966

7.88

1.11

Mandatory payroll taxes

144,082

9.62

1.34

133,908

9.59

1.35

Pension plan

51,829

3.46

0.48

65,923

4.72

0.66

Healthcare

124,614

8.32

1.16

108,243

7.75

1.09

Occupational health and safety

10,983

0.73

0.10

10,254

0.73

0.10

997

0.07

0.01

688

0.05

0.01

Education Culture

848

0.06

0.01

970

0.07

0.01

Professional training and development

11,788

0.79

0.11

8,779

0.63

0.09

Daycare centers or childcare allowance

1,797

0.12

0.02

1,473

0.11

0.01

Profit sharing

52,574

3.51

0.49

56,692

4.06

0.57

Other

4,164

0.28

0.04

4,563

0.33

0.05

Total - Internal social indicators

522,044

34.84

4.86

501,459

35.93

5.05

3 - External social indicators

R$ thou

% on OP

% on NR

R$ thou

% on OP

% on NR

Education

2,700

0.10

0.03

-

-

-

Culture

15,375

0.55

0.14

20,163

0.86

0.20

Health and sanitation

3,048

0.11

0.03

2,510

0.11

0.03

Sports

4,713

0.17

0.04

5,943

0.25

0.06

105

-

-

-

-

-

Other

12,253

0.43

0.11

7,820

0.33

0.08

Total contributions to society

38,194

1.35

0.36

36,436

1.55

0.37

Taxes (excluding payroll taxes)

1,701,446

60.33

15.85

1,466,228

62.27

14.77

Total - External social indicators

1,739,640

61.68

16.20

1,502,664

63.82

15,14

4 - Environmental indicators

R$ thou

% on OP

% on NR

R$ thou

% on OP

% on NR

Investments related to company production/operation

7,569

0.27

0.07

9,304

0.40

0.09

Investments in external programs and/or projects

20,147

0.71

0.19

21,122

0.90

0.21

Total environmental investments

27,716

0.98

0.26

30,426

1.29

0.31

Hunger eradication and food security

With regard to the establishment of annual goals to minimize waste, general consumption in production/operation, and improved efficiency in natural resource use, the company:

 

76

( x ) has no goals ( ) meets 51 to 75% ( ) meets 0 to 50% ( ) meets 76 to 100%

( x ) has no goals ( ) meets 51 to 75% ( ) meets 0 to 50% ( ) meets 76 to 100%

5 - Staff indicators

2012

2011

No. of employees at end of period

15,019

14,896

No. of hires during the period

915

723

No. of outsourced employees *

7,372

7,399

888

1,424

No. of employees over 45 y/o

8,471

7,757

No. of female employees

3,018

2,928

% of management positions held by female employees

19.44

19.09

No. of African Brazilian employees

2,227

2,137

% of management positions held by African Brazilian employees

3.49

3.72

No. of disabled employees or employees with special needs (includes Avape partnership)

170

163

6 - Relevant information on the exercise of corporate citizenship

2012

2013 Goals

Ratio between highest wage to entry level wage in the company

20.1

nd

Total number of work accidents

140

136

No. of interns

Social and environmental projects developed by the company were set by:

( ) officers

(x) officers and managers

( ) all employees

( ) officers


( ) all employees

The safety and health standards in the work environment were set by:


( ) all employees

( ) all + Cipa


( ) all employees

( ) all + Cipa

Regarding union affiliation freedom, the right to collective bargaining and internal representation of employees, the company:

( ) does not get involved

( ) follows ILO standards

(x) encourages and follows ILO

( ) will not get involved

( ) will follow ILO standards

(x) will encourage and follow ILO

The pension fund encompasses:

( ) officers

( ) officers and managers

(x) all employees

( ) officers


(x) all employees

Profit sharing encompasses:

( ) officers


(x) all employees

( ) officers


(x) all employees

In the selection of suppliers, the same ethical, social and environmental responsibility standards are adopted by the company:

( ) are not considered

( ) are suggested

(x) are required

( ) will not be considered

( ) does not get involved

( ) supports

(x) organizes and encourages

( ) will not get involved

Regarding the involvement of employees in voluntary work programs, the company:

at company

Total number of complaints and criticisms from consumers Ombudsman: 42,174 at Procon CIP: 1,222

% of complaints and criticisms pursued or solved Wealth for distribution (in R$ thou.): Distribution of wealth:

at company Ombudsman: 99.99%

at Procon CIP: 88.2%

( ) will support

(x) will organize and encourage

at JEC/Conc. courts: at company 343 Ombudsman: nd

at Procon CIP: nd

at JEC/Conc. courts: nd

at JEC/Conc. courts: at company 75.5% Ombudsman: nd

at Procon CIP: nd

at JEC/Conc. courts: nd

In 2012: 6,133,683 27.3% government 31.3% shareholders 0% retained

( ) will be suggested (x) will be required

25.7% employees 15.7% third parties

In 2011: 5,714,179 25.5% government 21.4% shareholders 0% retained

29% employees 24.1% third parties

7 - Other information The company does not employ child labor or work similar to slave labor, in addition to not being involved with prostitution or exploitation of children or adolescents, including corruption activities. Our company values and respects diversity both internally and externally.

 * The number of outsourced workers is estimated considering the labor allocated to the service arrangements, since Sabesp does not contract outsourced labor directly.

77

Reporting parameters  and processes This is the sixth time we disclose our Sustainability Report and the second time it is issued simultaneously with our Management Report, according to the decision of our Executive Committee deliberated in 2011. Such procedure is aligned with best market practices and has shown to be extremely important to disseminate Sabesp’s socio-environmental performance and economic-financial results to society in general. This routine was definitively incorporated to disclosure principles and transparency precepts adopted by the company.  We have maintained efforts to enhance reported information, both in quantitative and analytical terms. Our goal is open Sabesp to further examination by our stakeholders, which is a natural path for a company of our size, which handles such a crucial raw material.  GRI 3.13 In this edition, we reported 96 indicators, two less than the previous edition. We have assigned the GRI level B to the present report, similarly to the three previous editions. In order to facilitate the identification of GRI indicators, its numbers appear throughout the text, next to the respective theme, and a chart provided in the end of the document summarizes results.  The economic and financial dimensions are already audited by Deloitte Touche Tohmatsu, which also assesses the summary published in Diário Oficial do Estado de São Paulo and Valor Econômico newspaper, which contains a summarized vision of our social and environmental activities. For the social and environmental areas, our purpose is to assess external evaluators including attempting to involve institutions associated to academic activity, with the purpose of collaborating with the educator qualification process.   GRI 3.6 In addition to monitoring activities, our top management was intimately involved with the reporting process, which covers all activities in our operating and administrative units between January 1 and December 31, 2012. The proposal was debated and approved during a meeting of the Executive Board in November, and then submitted to the Board of Administration in two separate occasions: December 2012 and February 2013.  Once again, wording was developed by a team comprised of our own technical body. We conducted successive specific meetings since the second half of 2012, as well as revisions throughout the year, in order to obtain balance, comparativeness, accuracy and transparency of information reported. During the development process, we obtained external consulting assistance from Weingrill Informação e Comunicação Ltda., for the second consecutive year.  GRI 3.10/3.11


GRI 3.5/3.7 The information screening process prioritized the relevance of subjects related to Sabesp’s strategic options, transparent relationship with all stakeholders, results of the materiality matrix, and rendering of accounts to analysts, investors, governments, employees, clients, and especially the community in which we operate. In summary, the report reveals the organization’s interests and efforts towards integrating sustainability to its management process.   This year’s report conveys objective and concise wording, in line with the sustainability concept, reducing paper consumption and related expenses. The number of copies has been progressively reduced each year, as indicated in the chart below. 

No. of Copies

Edition

2008

2009 (1)

2010

2011 (2)

2012

Portuguese

2,000

1,000

700

600

400

English

300

200

-

200

-

Spanish

300

200

-

-

-

(1) As of this year, we will cease to publish the printed Spanish version of this document, which shall be provided exclusively electronically  (2) The 2011 version was printed in English on account of our participation in events such as Rio+20 and in celebration of our tenth year listed on the New York Stock Exchange. In 2012, we decided to provide such version exclusively digitally.

The search for conciseness does not affect, however, the integrity and availability of relevant company information. For such, we have prioritized access to supplementary data on our Internet site, reducing the volume published in the printed version, without preventing readers from accessing essential information in order to understand the company’s operations.  GRI 3.9 Operating indicators, goals and performance projections are provided throughout the document for the period covered until 2018. We also report historical series with data at least three years old. Operational information reported is calculated by Sabesp’s technical areas, based on international experience, in a standardization process adopted by the National Sanitation Reporting System of the Ministry of Cities. There is a constant effort to improve the quality of such indicators and add new ones whenever relevant.  For the economic and financial statements, also available on our website, we followed the standards issued by the Brazilian Securities and Exchange Commission (CVM) and the Brazilian Association of Listed Companies (Abrasca), and the transparent communication principles of the Brazilian Association of Corporate Communication (Aberje). For corporate governance and sustainability aspects, we used the

GRI model, and for the Social Balance Sheet, we used the Social Balance Preparation Guide of the Brazilian Institute of Social and Economic Analyses (Ibase) and the Instituto Ethos standard.  Since 2006, we are signatories of the Global Pact, a UN initiative that gathers companies to promote sustainable developments. We annually submit the English version of our report as “progress communication”.   GRI 4.14/4.16/4.17 The stakeholders’ engagement process for the preparation of the report included a sustainability hearing, held on December 11, 2012, promoting a sustainability experts workshop, aimed at gathering inputs for report preparation and suggestions on our Corporate Sustainability Policy. This workshop was attended by 51 external guests, who joined 38 people from our staff, divided into three theme panels: social; financial; environmental.  GRI 3.4 The electronic version of this report is available at sabesp.com.br/rs2012. Further information, suggestions or criticism on this publication can be addressed to [email protected]. As in previous editions, this report is carbon neutral. 

MATERIALITY MATRIX    In order to assess the level of compliance between what we consider as material to be highlighted in the report in the environmental and social dimensions and what stakeholders point out as being important, for the third consecutive year we used the materiality matrix tool, presented below. The opinions were gathered from NGOs, associations and businesses, and the responses were given only by one of their leaders or agents. Questionnaires were sent and received online. We received 38 responses (in 2011, we received 102, in 2010, we received 62 and, in 2009, 54).   We once again noted that the subjects of environmental management, water resources management and people management obtained the highest scores.  As we can see, there is a concentration of topics representing each subject in the upper right corner of the matrices, which indicates high consistency between the internal and the outside standpoints. In this aspect, we maintained the same trend of 2011. There is not much difference between what the company considers as important for its activities and what the stakeholders consider material to be included in the report.

DIMENSÃO SOCIAL 10

Visão das partes interessadas

9

11 5

8

7 8 9

7

4 1 12

6

13 3

10

2

6 5 4 3 2 1 0 0

1

2

3

4

5

6

7

8

10

9

Visão da Sabesp DIMENSÃO AMBIENTAL 10

1

3

Visão das partes interessadas

9 8

10 7

9

7

11 8

5

2 4

6

6 5 4 3 2 1 0 0

1

2

3

4

5

6

7

8

9

10

Visão da Sabesp


79

Location of GRI

Indicators 3.12

GRI INDICATOR G3

PAGES

1.1

Statement from the most senior decision-maker of the organization

6 and 7

1.2

Description of key impacts, risks and opportunities

Throughout the entire report

2.1

Name of the organization

8

2.2

Primary brands, products and/or services

8

2.3

Operational structure of the organization

8

2.4

Location of organization’s headquarters

8

2.5

Countries in which the organization operates

8

2.6

Nature of ownership and legal form

8

2.7

Market served

8

2.8

Scale of the reporting organization

8 and 62

2.9

Significant changes during the reporting period regarding size, structure or ownership

There were no changes in terms of size or equity interest in 2012

2.10

Received awards

61 and 73

3.1

Reporting period

January 1st 2012 to December 31st 2012

3.2

Date of previous report

March 23rd, 2012

3.3

Reporting cycle (annual, biennial)

The next sustainability report is scheduled for publishing in 2014,related to fiscal year of 2013. The report is published annually

3.4

Suggestion/contact information

79

3.5

Content-definition process

78

3.6

Report boundaries (units/facilities)

78

3.7

Content restrictions

78

3.8

Basis for reporting on subsidiaries or other entities

Sabesp does not have subsidiaries

3.9

Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimates applied to the compilation of the indicators and other information in the report

78

3.10

Revisions regarding the previous report

78

3.11

Scope, limit ad measurement changes

78

3.12

GRI indicator location chart

80

3.13

Policy and current practice with regard to seeking external assurance for the report

78

Governance structure

46

4.1 4.2 4.3 4.4 4.5 4.8 4.12

Indicate whether the chairman of the highest governance body is also an executive officer State the number of members of the highest governance body that are independent and/or non-executive members Mechanisms for shareholders and employees to provide recommendations to the highest governance body Association between compensation for members of the highest governance body, senior managers and other executives, and the organization’s performance Statements of mission or values, codes of conduct and relevant principles Externally developed economic, environmental and social charters, principles or other initiatives to which the organization subscribes or endorses

46 46 71 48 8 55 and 59

4.13

Memberships in associations and/or national/international advocacy organizations

Sabesp is a member of industry organizations, such as Associação das Empresas de Saneamento Básico Estaduais (Aesbe), Asociación Interamericana de Ingeniería Sanitaria y Ambiental (Aidis), and Associação Brasileira da Infraestrutura e Indústrias de Base (Abdib)

4.14

Stakeholders' engagement

79

4.15

Basis for stakeholders' engagement

72

4.16

Approaches for stakeholders' engagement

79

4.17

Key topics and concerns that have been raised through stakeholder engagement, and measures adopted by the organization to address them

79

EC1

Economic value generated and distributed

46

EC2

Financial implications and other risks and opportunities for the organization’s activities due to climate changes

54

EC3

Coverage of the organization’s defined benefit plan obligations

65

EC4

Significant financial assistance received from government

73

EC5

Range of ratios regarding standard entry level wage compared to local minimum wage at relevant operating areas

65


EC6 EC7 EC8 EC9

Policies, practices and expense ratios with local suppliers on relevant operating units Procedures for local hiring and proportion of senior management hired from the local community at relevant operating areas Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in kind or pro bono engagement Understanding and describing significant indirect economic impacts, including its extent

70 63 74 60

EN1

Materials used by weight or volume

12

EN2

Percentage of recycled materials used

12

EN3

Direct energy consumption by primary energy source

12

EN6

Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives

12

EN10

Percentage and total volume of water recycled and reused

12

EN11

Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value beyond protected areas

56

EN13

Protected or restored habitats

56

EN16

Total direct and indirect greenhouse gas emissions by weight

12 and 54

EN18

Initiatives to reduce greenhouse gas emissions and reductions achieved

54 and 55

EN21

Total water discharge by quality and destination

12

EN26

Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation

23 and 55

EN30

Total environmental protection expenditures and investments, per type

12 and 76

LA1

Total workforce by employment type, employment contract and region

63

LA2 LA3

Total number and rate of employee turnover by age group, gender and region Benefits provided to full-time employees that are not provided to temporary or part-time employees, separated by major operations

65 65

LA4

Percentage of employees covered by collective agreements

67

LA5

Minimum notice period regarding operational changes, including whether it is specified in collective agreements

The collective agreements do not stipulate the minimum notice period regarding operational changes. Possible changes are communicated in advance, and the period varies according to the circumstances

LA6 LA7 LA8 LA9 LA10 LA11 LA12 LA13 LA14 HR1 HR2 HR3 HR4 HR5 HR6 HR7

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 Rates of injury, occupational diseases, lost days and absenteeism, and number of work-related fatalities by region Education, training, counseling, prevention and risk-control programs in place to assist employees, their family members or community members regarding serious diseases Health and safety topics covered in formal agreements with trade unions Average hours of training per year and per employee, by employee category Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings Percentage of employees receiving regular performance and career development reviews Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group and other diversity indicators Ratio of basic salary between men and women, by employee category

68 69 Employees attend courses and lectures related to disease prevention and risk-control. Treatments (physiotherapy, GPR, acupuncture, etc.) are covered by our healthcare plan Sabesprev The collective agreements entered into between Sabesp and trade unions do not specifically cover health and safety topics 67 68 67 63 and 64 64

Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights assessments Percentage of significant suppliers and contractors that have undergone assessments on human rights and measures adopted 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

We do not carry out human rights assessments regarding significant suppliers and/or contractors

Total number of incidents of discrimination and actions taken

47

Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights Operations identified as having significant risk for incidents of child labor, and measures adopted to contribute towards eradicating child labor Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to eradicating forced or compulsory labor

71

68

67 71 71


81

HR8 HR9 SO1 SO2 SO3 SO4

Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations Total number of incidents of violations involving rights of indigenous people and measures adopted Nature, scope and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating and exiting Percentage and total number of business units analyzed for risks related to corruption Percentage of employees trained in organization’s anti-corruption policies and procedures Actions taken in response to corruption incidents

68 No incidents of this type were recorded in 2012 72 47 47 47 We operate pursuant to the environmental sustainability policies and objectives and the public policies on such subject. We are actively involved in the National and State Water Resources Management Systems at all levels, and we have representatives in the São Paulo State Hydrographic Basin Technical Chambers, Committees and Subcommittees

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

Sabesp does not adopt this practice

SO7

Total number of legal lawsuits for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes

The lawsuit, filed in 2010, claiming compensation for damages caused by the gas cartel condemned by Cade is still in progress. There was a lower court ruling unfavorable to Sabesp and we are currently awaiting judgment of the appeal filed

PR1

PR2

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 Total number of incidents of noncompliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, separated by result type

PR3

Type of product and service information required by product and service labeling procedures, and percentage of products and services subject to such requirements

PR4

Total number of incidents of noncompliance with regulations and voluntary codes concerning product and service labeling information, separated by result type

PR5

Practices related to customer satisfaction, including results of surveys measuring customer satisfaction

PR6

Programs for adherence to laws, standards and voluntary codes related to marketing communications, including advertising, promotion and sponsorship

PR7 PR8

Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion and sponsorship, separated by result type Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data

68

68 Despite not employing procedures regarding the mitigation of specific product and service labeling risks - since they are related to bottled products - the company discloses all water quality parameter (turbidity, chlorine, fluorine, total coliforms, thermotolerant coliforms) in the monthly water and/or sewage service bill, as per Presidential Decree no. 5.440/05 and Directive no. 2.914/11, of the Department of Health Despite not employing procedures regarding the mitigation of specific product and service labeling risks - since they are related to bottled products - the company discloses all water quality parameter (turbidity, chlorine, fluorine, total coliforms, thermotolerant coliforms) in the monthly water and/or sewage service bill, as per Presidential Decree no. 5.440/05 and Directive no. 2.914/11, of the Department of Health 61 Sabesp complies with relevant legislation and the standards enacted by the National Advertising Self-regulation Council (Conar). To date, there was no case involving Sabesp judged irregular by Conar In 2012, we did not have any non-compliance cases related to codes or legislation concerning marketing communications, including advertising, promotion and sponsorship In 2012, there were no complaints regarding breaches of customer privacy and losses of customer data

Location of Global Pact Principles principles

PAGES

1 2 3 4

Respect and protect human rights

19, 46, 47, 59, 62, 67, 68, 70 and 72

Prevent human rights violations

62, 68 and 71

Support freedom of association in the workplace

67

Abolish forced labor

59, 62, 68 and 71

5

Abolish child labor

59, 62, 68 and 71

6

Eliminate discrimination at the workplace

46, 47, 60 and 62

Support a preventive approach to environmental challenges

25 and 72

Promote environmental responsibility

25 and 72

Encourage technologies that do not harm the environment

25 and 72

Fight corruption in all of its forms, including extortion and bribery

46, 47 and 59

7 8 9 10


CORPORATE INFORMATION  sabesp.com.br / Investors: sabesp.com.br/investidores 

2012 Sustainability Report  sabesp.com.br/rs2012  Suggestions/comments for the report: [email protected] 

SOCIAL NETWORKS  youtube.com.br/user/saneamentosabesp  flickr.com/sabesp  facebook.com/oficialsabesp  twitter.com/ciasabesp 

CUSTOMER SERVICE  Virtual Branch: your online service office. Request a copy of your water bill, leak repairs, check your consumption history and know how to make payments.   https://www9.sabesp.com.br/agenciavirtual  Online customer service: contact our attendants and clarify doubts regarding our services. Monday through Friday, 8:00 am to 9:00 pm, and Saturdays, 8:00 am to 5:00 pm.   sabesp.com.br • Option: atendimento online  Service branches: find the service branch closer to your home on our website or on the water bill delivered in your home.   sabesp.com.br • Option: clientes e serviços  

CALL CENTER  195 (toll free)   For emergencies, such as water shortage, leaks and clogged sewage.   Available 24/7. 

COMMERCIAL SERVICES  For information on bills, request a copy (for lost or not received bills), request services, addresses, useful phone numbers, or brochures.   São Paulo Metropolitan Region: 0800-0119911 (toll free)  Monday through Friday, 7:00 am to 9:00 pm, and Saturdays, 8:00 am to 5:00 pm.   Inland and coast cities: 0800-0550195 (toll free)  Available 24/7.  Telephone service for the hearing impaired: 0800-7773700 (toll free)  Call center for all operational and sales services in the São Paulo Metropolitan Region.  Monday through Friday, 8:00 am to 6:00 pm.   Sabesp Environmental Solutions for São Paulo Metropolitan Region: 0800-07712482 (toll free)  Provides exclusive service for large customers on individualized water metering, Pura (Rational Use of Water Program), non-domestic wastewater, reclaimed water and the other services of the program.  Monday through Friday, 8:00 am to 6:00 pm.  Ombudsman Office: 0800-0550565 (toll free)  With the filing number in hands, users can register complaints regarding services already requested. In addition, you can send criticism, report irregularities or make compliments.   Monday through Friday, 8:00 am to 6:00 pm.  sabesp.com.br • Option: ouvidoria


83

@CiaSabesp

Follow us on Twitter. Check our posts on the 2012 Sustainability Report

#rs2012

UNIVERSAL SERVICES  @CiaSabesp progresses toward universal water and sewage services in the area where it operates by the end of the decade. #rs2012 

  Se Liga na Rede 

Through the Se Liga na Rede program, @CiaSabesp connects low-income family homes to the public sewage system. #rs2012 

  27.7 million people 

Largest sanitation company of the Americas. Fifth largest in population served: @CiaSabesp serves 27.7 million people. #rs2012 

  APPRECIATION 

@CiaSabesp’s shares recorded the third highest Ibovespa appreciation, and the company’s market value grew by 67%. #rs2012 

  BEST ENVIRONMENTAL PRACTICES 

In line with best environmental practices, @CiaSabesp renewed 75.3% of its light vehicle fleet and 48.3% of its truck fleet. #rs2012 

  SOCIAL RESPONSIBILITY 

Through the Se Liga na Rede Program, @CiaSabesp connects low-income households to the public sewage system. #rs2012 

  SEWAGE COLLECTION 

@CiaSabesp collects the sewage of 21 million people. #rs2012 

  AQUAPOLO AMBIENTAL 

@CiaSabesp’s Aquapolo Ambiental has the largest reclaimed water production plant in Brazil and one of the top five in the world. #rs2012 

  SPORTS INCENTIVE 

In 2012, @CiaSabesp invested R$ 2.8 million in sports incentive projects. #rs2012 

  INVESTMENT 

In 2012, @CiaSabesp invested R$ 2.5 billion and recorded profits 56.3% greater than 2011. Message from Sabesp’s CEO. #rs2012 

  BIOGAS PRODUCTION 

Using biomethane as fuel, @CiaSabesp will prevent the emission of 1,600 tonnes of greenhouse gases into the atmosphere. #rs2012 

 

@CiaSabesp

TREATMENT PLANTS  @CiaSabesp operates 214 water treatment plants and 493 sewage treatment plants. #rs2012 

  CINEMA INVESTMENTS 

@CiaSabesp is one of the top investors in cinema in the State of São Paulo and one of the three largest sponsors of Brazilian cinema. #rs2012 

  SUSTAINABILITY 

Initiatives against water waste implemented by @CiaSabesp successfully reduced water consumption per capita in the Metropolitan São Paulo Region by 11%. #rs2012 

  COVERAGE  The @CiaSabesp sewer system is colossal: 45,800 km. The water distribution system is even larger: 67,600 km. #rs2012 

  PURA 

@CiaSabesp’s rational water use program Pura saves sufficient water to supply 26,000 people. #rs2012 

  NOSSA GUARAPIRANGA 

In 2012, @CiaSabesp retained 4,400 cubic meters of residues through the Nossa Guarapiranga program – one garbage truck per day. #rs2012 

  RESEARCH AND INNOVATION 

In 2012, @CiaSabesp invested R$ 6.3 million in RD&I, practically doubling last years’s investments. #rs2012 

  FOREST RESERVES  @CiaSabesp

maintains 30,000 hectares preserved in three forest reserves. #rs2012 

  projeto TIETÊ 

With the conclusion of the 3rd stage of Projeto Tietê, an additional 1.5 million people will benefit from sewage services from @CiaSabesp. #rs2012 

  Córrego limpo 

Through the Córrego Limpo program, @CiaSabesp reached the mark of 116 brooks free from sewage. #rs2012 

  LOW TARIFF 

@CiaSabesp tariffs are among the lowest of the entire country. The company currently ranks 16th among 27 state companies. #rs2012 

@CiaSabesp

CORPORATE GOVERNANCE  @CiaSabesp integrates BM&FBovespa’s Novo Mercado, the stock market’s segment with highest level of transparency between the market and shareholders. #rs2012 

  MARKET VALUE 

@CiaSabesp’s market value reached R$ 19.8 billion in 2012. #rs2012 

  REDUCE, RECLAIM AND RECYCLE 

In 2012, @CiaSabesp directed 372 tons of materials to recycling. #rs2012 

  digital inclusion 

The @CiaSabesp Virtual Agency was perfected to support access by visually impaired users. #rs2012 

  RESPECT FOR DISABLED CITIZENS 

In 2012, @CiaSabesp began providing braille versions of water and/or sewage bills. #rs2012 

  CUSTOMER SERVICE EFFICIENCY 

100% of telephone customer service contacts at @CiaSabesp are completed within up to 60 seconds. #rs2012 

  SOCIAL TARIFF 

280,000 households were benefited with the @CiaSabesp social tariff in 2012. #rs2012 

  CUSTOMER SATISFACTION 

In 2012, 89% of 5,862 individuals interviewed by @CiaSabesp stated they were satisfied or extremely satisfied with the company’s services. #rs2012 

  OMBUDSMAN 

@CiaSabesp won all categories of the 2012 Brazilian Ombudsman Award, from the Consumidor Moderno magazine. #rs2012 

  ENVIRONMENTAL SANITATION RESEARCH 

@CiaSabesp implemented Brazil’s first research center dedicated to the environmental sanitation area in São José dos Campos. #rs2012 

  RECLAIMED WATER 

With the Aquapolo Ambiental, located in ABC, @CiaSabesp expanded its reclaimed water production thirteen-fold. #rs2012 


www.sabesp.com.br