GRI 1.1 | 1.2

At KPMG, we view sustainability as a path to take, and as such, we have evolved in the way we manage and communicate. We are proud to present the second edition of our Sustainability Report, in accordance with the guidelines from the Global Reporting Initiative (GRI), reaffirming our commitment to provide high quality services with transparency, valuing individuals and preserving the environment.

Through this report, we are accountable to our clients, partners and professionals, to sector specialists, society and the media. We present below our work, guidelines and main achievements in 2011, aligned with the KPMG International (KPMGI) global model. We have tried to demonstrate how, in all of our activities, we prioritize ethics and independence, and view challenges as opportunities for growth and innovation.

In preparing this publication, we were able to rely on the participation of our professionals, clients, specialists and various stakeholders. We performed real team work, which we attempt to do in all of our activities, uniting efforts to achieve common objectives.

Through this engagement, our main stakeholders expressed their opinions on the most important themes that a responsible company, from our segment, should focus on.

At the heart of their concerns are ethics, governance, quality and independence and the well being of our professionals.

The message is clear and is aligned to KPMG's understanding: these are attributes of sustainability, and our main contribution to society. We believe that responsible practices contribute towards the sustainable development of our country, and that our services can add value to societies and the markets in which we operate.

Our performance is supported by our vision and our values, which strengthen our transparency and integrity, and also our commitment towards our communities. We have adopted a citizen approach and we participate in important global initiatives aimed at developing societies, such as the Global Compact, the Eight Millennium Development Goals and the Seven Principles for Empowering Women, all of these from the United Nations Organization (UNO).

Prior to publishing this report, we participated actively in Rio+20, in June 2012. Our professionals from the sustainability area in Brazil and from other member-firms of KPMG International contributed with knowledge and with a debate on our recent publication: Expect the Unexpected: Building business value in a changing world. This study presents the ten sustainability megaforces that will impact each and every business over the next 20 years, through challenges and opportunities. Above all, the study highlighted the connection between the mega-forces and the need for us to work efficiently to achieve the transition to a sustainable development model, since this is as necessary for preserving the planet as for the longevity of businesses.

The practical results of Rio+20, include the initiative taken by financial institutions, know as Natural Capital Declaration, which should influence investors' decisions and therefore represents the opportunity to expand our advisory services to integrate Environmental, Social and Governance factors (ESG) to businesses. Other measures, both for governance and the capital markets, related to the publication of sustainable reports, could increase the demand for assurance projects. Therefore, for KPMG, there are opportunities for advisory services for clients, aimed at a management that adequately addresses these challenges and opportunities.

And speaking of development, in 2011, the international scenario was marked by significant macroeconomic instability, particularly in the developing countries. Brazil, despite the external volatility, presented both solid growth and reliable institutions, and achieved the position of the 6th largest economy worldwide. Gross Domestic Product (GDP) increased 2.7% during the year, surpassing Great Britain, and reaching US$ 2.48 trillion. We believe that this robust national economy should persist, in line with the Government's estimates of more accentuated growth in GDP and a reduction in the Selic rate in the next two years.

At KPMG in Brazil, we also commemorated the performance of our operations during the year. In 2011, the revenue for the network of independent entities that operate under the brand KPMG in Brazil reached a high of R$ 708 million, an increase of 29% compared to 2010.

We acquired the fifth largest audit firm in Brazil and we successfully integrated approximately 1,000 professionals within our team. As a result of this acquisition, we strengthened our position on the entrepreneur market – improving our services to small and medium sized companies – and divided our offices into sub-regions, increasing the presence of partners and directors in various regions throughout Brazil. Thus, we are able to offer services with the KPMG global quality, without losing our focus on the regional challenges and opportunities of each client.

To correspond to the increased complexity of our business environment, increasing regulations and the opportunities and growth of the market, we reviewed our organizational structure, introducing the position of Chief Operating Officer (COO). This position provides greater dedication to KPMG's operational activities in Brazil, providing improved agility in its daily business activities.