Braskem S A : 2019 Integrated Report

INTEGRATED REPORT

2019

2

SUMMARY

LETTER FROM THE CEO	3
ABOUT THIS REPORT	6
BUSINESS OVERVIEW	7
OUR VALUE GENERATION THROUGH 6 CAPITALS	13
OUR BUSINESS MODEL	16
GOVERNANCE	17
COMPLIANCE	22
RISK MANAGEMENT	26
EXTERNAL ENVIRONMENT	31
CAPITAL PERFORMANCE	32
Human Capital	33
Intellectual Capital	38
Natural Capital	42
Social and Relationships Capital	48
Manufactured Capital	60
Financial Capital	62
OUTLOOK FOR THE FUTURE AND STRATEGY	65
HISTORICAL DATA	70

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MESSAGE FROM THE PRESIDENT

Dear Readers,

The first quarter of 2020 was marked by a quite challenging global macroeconomic scenario, due to COVID-19 pandemic, which led to a slowdown in the Brazilian economy and in the other countries where we operate, what resulted in a significant demand reduction for the most part of industries, affecting mainly durable goods seg- ments, such as transportation, infrastructure and con- struction. On the other side, since the beginning of second quarter we have been observing a demand recovery in all sectors at the regions where operate.

With regard to petrochemical sector, the challenges imposed by the pandemic smoothened the down cycle that has been affecting the industry since 2018 given the lower growth of global economy. Additionally, the fall in oil prices at the beginning of the year, caused by the increase in Saudi Arabia production, after tensions with Russia on the context of OPEP discussions, affected positively the petrochemical industry due to competitive prices of raw material. In this respect, the most recent projections by external consulting firms have improved petrochemical spreads in relation of its initial expectations for 2020.

Within this scenario, we have reinforced our commitment to the society, by acting cooperatively in the production of materials for combating the pandemic; to the com- munities, by donating essential materials; to our clients, by attending their needs with timeliness, resiliency and quality; to our team members, by providing health and safety support; to our shareholders, by preserving our cash position and maintaining our financial robustness;

and to the sustainable development, by advancing in the climate change and circular economy agendas.

Cooperation and global coordination to face the pandemic

Due to the recent impacts of the pandemic on society as a whole, our central focus has been on the safety of people and reliability of our operations, since our business is deemed essential to fight the pandemic, as we are part of the chain of supply of hospital, hygiene and packaging products. In this regard, we have reinforced our goal of improving people's lives through chemistry and plastic, and adopted collaboration measures for such a delicate moment for our society. Said measures included (i) donating resins and other materials to the manufacture of 60 million masks, 750 thousand liters of gel hand sanitizer and hospital-grade protection masks; (ii) supporting the communities, donating grocery hampers to 1.2 thousand families that work with recycling, and hygiene products to 50 thousand families that live in the areas surrounding our operations, and we have also supported the building of the field hospital in Alagoas; (iii) supporting clients, with a special credit facility for small- and medium-sized companies; and

1. the safety of our members, with reduced teams for production, lock-in, reinforcement of HSE practices, re- mote work for members that are part of the risk groups and for those who work at the offices, as well as medical support for suspected and confirmed COVID-19 cases.

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Our results' resiliency

Despite the challenging scenario and the development of the geological phenomenon in Maceió, the strategy defined by the Company, and which has been implemented since 2010, focusing on geographic and feedstock diversification and on competitiveness and productivity, was crucial for the Company to have a free cash generation of R$ 3 billion in the year, influenced mainly by working capital optimizations, tax credits monetization (PIS/CO- FINS), strengthening client's loyalty thru advanced payments for future sale, and the reduction of payments of Brazilian IR/CSLL taxes. Such effects made up for the decrease of the Company's recurrent EBITDA in Reais, mostly due to the smaller spreads in the international market, especially that of polyethylene.

In 2020, the challenges remain and our results reinforce our business resiliency, as a result of the strategy that we have been developing. The flexibility of our operation allowed us to keep producing and timeliness attending to our clients' needs, by production optimization and capturing synergies among our global units. Besides that, due to the supplier's diversification strategy, we have increased the crackers utilization rate in Mexico, thru the development of Fast Track solution to import ethane from United States.

Furthermore, during this year, we concluded the construction of our new polypropylene plant at La Porte, Texas, which has 450 thousand tons of production per year. The new plant is aligned with our strategy of feed- stock diversification and geographical expansion in the Americas, reinforcing our leadership position on poly- propylene production at United States.

Commitment to the environment, the society and corporate governance

In relation to the progress regarding the environment front, we were recognized as an A-List Company for the Water and Climate CDP indexes, for the 2018 man- agement. We have also expanded our I'm green™ brand, which now includes recycled resins from our Circular Economy business, which sold over 1.6 thousand tons of items of recycled origin in 2019. In addition, in 2020 we reached a reduction of 19,3% on GHG emissions inten- sity, scope 1 and 2, regarding 2008 baseline.

With regard of Circular Economy, we have started studies in partnership with EngePol - Polymers Engineering Laboratory (EngePol) of the Alberto Luiz Coimbra Institute for Postgraduate Studies and Engineering Research of the Federal University of Rio de Janeiro (COPPE/ UFRJ) - and with the training institute SENAI CETIQT, through the SENAI Innovation in Biosynthetics and Fibers Institute, to develop the technology needed for chemical recycling, that transforms post-consumption plastic into pyrolysis oil, used as feedstock to produce new polymers. In 2020, we have advanced in this topic, signing a new cooperation agreement to formalize next stages of the research, which target to develop catalysts to improve the quality of products generated by the chemical recycling process.

Besides such advances, we also have signed one more agreement to purchase renewable energy, in alignment with our strategy to expand the use of clean energies in its industrial operations. This is the third agreement for the purchase of competitive renewable energy signed by Braskem, which is nearing the mark of 1 million tons of CO₂ emissions avoided through the use of solar and wind power purchase agreements.

We have also made progress in our relationship with the communities. In 2019, our private social investments, along with the global volunteering program, have benefited over 533 thousand people, which is more than twice the number of beneficiaries in relation to the previous year. Out of this number, 94 thousand people have benefited only from the program, which had a record number of volunteers. All of these achievements are the fruit of our purpose, which is to improve people's lives through sustainable solutions regarding chemistry and plastic.

Moreover, in order to get through all the challenges of the year, achieve our goals and move towards our strategic ambition, the central role played by our members has been and still is fundamental. By sharing respect, responsibility, and an ethical and transparent behavior, we delivered value to all our stakeholders, in a daily and committed work. For such, we have also worked on implementing our BeUx proposal of value, to provide our members with significant experiences aligned with their goals and values. One of the highlights for the construction of said experience was the Diversity and Inclusion Program, which has completed 5 years and achieved