Environmental

Environmental Aspects

The Brazilian Constitution states that Federal and State legislation may regulate environmental protection activities, in addition to assigning supplementary jurisdiction to municipalities. While the Federal government promulgates environmental protection laws establishing minimum standards, the States issue environmental laws and regulations with more specific rules. Much of Brazil’s legislation has been established at the State level. In addition to generic regulations set forth in environmental legislation, we comply with additional environmental protection standards that are established in the Operating Licenses issued for each our projects.

In 1998, the Brazilian government promulgated a law imposing criminal penalties on companies and individuals breaching environmental legislation. Individuals (including directors, officers and board members) may be arrested and imprisoned for up to five years if sentenced for environmental crimes. Companies may be subject to penalties or may be ordered to render community services, in addition to several other constraints, including a ban on the possibility of obtaining financing from government entities. At the Civil Service level, companies that fail to comply with environmental legislation may be subject to fines reaching R$ 10 million, with their operations suspended, and may be forbidden to sign contracts with government entities, in addition to being forced to make reparations or pay indemnity for any damages that they may cause to the environment, while also losing tax benefits and incentives.

Assigning Liability for Environmental Damages

Offenders failing to comply with environmental legislation may be subject to criminal and administrative sanctions, without adversely affecting their obligations to make reparations for any environmental damages that they may cause. Although we have never been subject to any environmental sanctions that might have any significant effects on our businesses, the sanctions that might be imposed on us for possible future environmental crimes and offences include, among others: (1) imposing fines at the administrative level that might top R$ 50 million, depending on the economic capacity and track-record of the offender, as well as the severity of the facts and earlier events; these fines may be doubled or even tripled for repeat offences; (2) suspension or interdiction of activities at the enterprise in question; and (3) loss of tax incentives and benefits.

It is important to stress that Brazilian legislation also stipulates that directors, officers, administrators and other individuals serving as our agents, representatives or proxies who may be engaged in the environmental crimes attributed to us will also be subject ? to the extent of their guilt or blame ? to penalties curtailing their rights as private persons and even depriving them of freedom. Furthermore, environmental legislation also makes provision for the possibility of disregarding the corporate status of the company, meaning that the assets of the partners and administrators may be seized should an offence be confirmed breaching the Articles of Incorporation or fraudulent management of the company in order to hamper reparations being made for damages caused to the environment.

Finally, environmental law establishes that civil liability for environmental damages is objective, meaning that the obligation to make reparations may encompass all those causing such damage either directly or indirectly, regardless of proving the blame of the agents, provided that there is a causal nexus. Thus, activities with the potential to pollute the environment performed by the Subsidiaries, as well as outsourcing tasks at any of our enterprises, including the removal of vegetation and earthmoving activities, for example, does not release us from liability for possible future environmental damages caused by the subsidiaries and the outsourced companies, should their fail to perform their activities in compliance with the environmental directives.

Compliance with Environmental Requirements

With regard to environmental protection, the Company is subject to local State and Federal laws and regulations, as described above.

Thus, when acquiring land where it intends to develop its real estate ventures, the Company addresses all necessary and applicable environmental aspects as a result of the need to comply with environmental legislation, paying particular attention to features such as well-springs, trees, vegetation and the location of these tracts of land in terms of areas under permanent preservation around the site. Thus, before taking the decision to acquire property, all relevant aspects are analyzed.

Moreover, Goldfarb runs the Planet Life project, channeling its efforts linked to sustainability and the environment, through conducting studies on upgrading our enterprises, including aspects such as:

  1. individual water metering system, with individual charges and water saving incentives;
  2. rainwater uptake and use in common areas and plants;
  3. selective garbage collection;
  4. toilet bowls with smart flushing systems, using less water for each flush;
  5. taps fitted with water release timers;
  6. door frames made from reforested timber;
  7. presence sensors in halls ensuring energy savings;
  8. use of energy saving structural brickwork systems that reduce rubble volume with less wasted material.

Moreover, training sessions are held with employees and other workers, showing them how to save office materials and recycle garbage, among other matters.

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