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PEOPLE – EMPLOYER OF CHOICE

In this chapter we bring information about our personnel, completing the four strategic pillars of KPMG, and addressing the fourth theme rated as a priority by our stakeholders as shown in the figure below.

Strategy Fundamentals at KPMG

It is our people that address the issues prioritized by our stakeholders, which create value for clients through solutions that help them develop competitive advantages, and offer greater transparency and credibility for their financial statements. By way of our services portfolio, our professionals assist the capital markets to face their challenges, they can make public services more efficient, the financial market more solid, and develop governance in various segments, contributing to building a vibrant and more sustainable society.

Our focus is therefore on developing our professionals’ potential and capitalizing on our expertise to leverage the potential of people who live in the societies we operate in. In this topic we present our People Management and Corporate Citizenship work.

People Management

People are essential to KPMG. In order to play a crucial role in the business world, especially in respect of helping clients achieve their full potential, we encourage our professionals to also develop their full potential.

A robust career plan supports this development, along with works that provide our professionals with constant opportunities to face challenges and innovation.

This commitment to a high performance culture drives our professionals to have a global and forward-looking vision, to be specialists and to carry out their work and create value for clients. This has made KPMG an organization recognized for attracting and developing great talents.

See below the profile of our team and the practices of three areas - People, Performance & Culture; Learning and Development; Corporate Citizenship - to attract, contract, develop, support, recognize and retain the best professionals is essential for enduring growth and to promote the succession process in KPMG in Brazil and to help earn it recognition as an “Employer of Choice”.

Fundamentals of People Management

Our team

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As of September 30, 2012, the KPMG in Brazil team consisted of 3,885 people, distributed as follows:

• 3,634 professionals of KPMG, with:

- 3,354 own staff registered in accordance with Brazil's labor legislation (CLT ).

- 17 apprentices

- 263 partners and partner-directors.

• 227 employees of contractors (outsorced), with no employment relationship with KPMG, mainly allocated to infrastructure support services.
  
• 24 temporary staff.

69% of our professionals are concentrated within the São Paulo and Rio de Janeiro offices, consequently, we opted to present the indices divided between three categories: São Paulo Office, Rio de Janeiro Office and other offices. Only 1% of our own employees and temporary staff work for six hours a day. Since this is not a significant figure, we have removed the category and reformulated the reporting method to facilitate the viewing of this information. The apprentices have been included in the category "permanent contract". For a detailed view of the number of professionals by category, see pages 87, 88 e 89.

Distribution by office – KPMG Professionals

*Belo Horizonte, Brasília, Campinas, Curitiba, Florianópolis, Fortaleza, Goiânia, Joinville, Londrina, Manaus, Osasco, Porto Alegre, Recife, Ribeirão Preto, Salvador, São Carlos, São José dos Campos and Uberlândia.

Diversity

As a citizen Organization, we are responsible for encouraging diversity and inclusion. This commitment is declared in our value "we respect the individuals", and is reinforced in our Code of Conduct, which promotes an environment free of discrimination.

KPMG professionals

KPMG professionals - Administrative team

We have improved the data collected in 2011, including the category “Apprentice”. In previous years, the apprentices were included in the category staff. The purpose of dividing our professionals between “technical team” and “administrative team” is to provide clear information on the number of professionals directly involved in our core business (technical team).

Quadro de profissionais da KPMG - Technical team

We corrected the allocation of 70 trainees who mistakenly had been included in the administrative area in 2011 when in fact were from technical area. We have improved the data collected in 2011, including the category “Apprentice”. In previous years, the apprentices were included in the category staff. The purpose of dividing our professionals between “technical team” and “administrative team” is to provide clear information on the number of professionals directly involved in our core business (technical team).

Inklusão Group Multi-area group which reinforces our program stimulating diversity, encouraging the recruitment of a creative means of facilitating the inclusion of individuals with disabilities (PCDs). The recognized lack of qualified labor in the Brazilian marketplace becomes even more sensitive when one considers PCDs, resulting in the majority of recruitment taking place in the administrative area. Here are some of the actions promoted by Grupo Inklusão: Personalized trainee program for young PCDs – Which commenced in 2011 and is aimed at offering opportunities to these young people, using a recruitment and selection process which is adapted to the special needs of each candidate. Nine trainees were hired in 2011. Despite the efforts of all involved in the 2012 process, no candidates had the necessary skills to be hired. In 2013, we will continue investing in the Trainee Program as one strategy to achieve the effective inclusion of PCDs at KPMG. A pilot-program for training PCDs – Planned to take place in 2011 and 2012, was delayed due to operational difficulties. We sought assistance via a partnership with the Labor Support Center (CAT) at the São Paulo City Hall in order to overcome these issues, allowing for readjustments to the program and the availability of vacancies. We also established partnerships with Rede Cidadã (Citizenship Network) in Belo Horizonte and the State Center to Attend People with Disabilities (NEAD) in Rio de Janeiro, to assist us with recruiting people with disabilities. The pilot-program is awaiting management approval in order to be implemented, and has the aim of preparing and contracting 12 professionals by December 2013. A manual on working together for an internal audience - Which aims to assist with the effective integration of PCDs, highlighting appropriate ways to interact. The information is circulated using the intranet, an institutional video and in-house magazines. Accessibility - The infrastructure area made the adaptations necessary for complying with accessibility criteria, guaranteeing that any professional with a type of limitation is not at a disadvantage when carrying out his daily working routine. Awareness-raising – We made use of our position as opinion makers to publicize the importance of and challenges to employing and integrating PCDs using social networks and publications such as the magazines Sentidos and Reatech. We also support development of the “Noturno Cadeirante”, a wheelchair user project, which intends to take a show to two cities in Paulo, in addition to the capital, and a march for the International Day for People with Disabilities. We also promote our Adapted for PCDs Trainee Program at the Student Fair at Mackenzie University in São Paulo.

Composition of the Inklusão Group Marcela Navarro (RH) Tatiana Gouveia (RH) Adélia Belo (L&D) Braulio Fernandes (KC) Lucimara Vieira (Programação) Keli Castro (Marketing) Eliete Ribeiro (Tax) Eliane Momesso (Cidadania Corporativa) Patrícia Molino (P&T) Renata Greb (Audit – RM) Roberto Coelho (IT ) Ronaldo Rodrigues (IE Compras) Marilda Soares (RH – RJ) Marcos Boscolo (Audit G1) João Alouche (Audit G2) Glecy Romito (BPO) André Bibo (Pool) Marcos Aguirre (BDM) Luiz Renato Guimarães Pereira (T&R)

Of all of the independent entities that operate under the name KPMG in Brazil, only one does not meet the quota determined by legislation in force, for which we signed a Change of Conduct Commitment, with the Ministry of Employment establishing an action plan to address this issue and increase the hiring of these individuals.

Gender equality and women's empowerment

In global alignment with the UN’s 8 Millennium Development Goals, we have cultivated conditions that contribute to a more flexible and inclusive working environment, which enables the professional development of women and their promotion to leadership positions within KPMG in Brazil.

In Brazil 27% of manager, partner-director and partner positions are filled by women, and KPMG International’s goal is to have 25% of leadership positions (partners) at the member firms filled by women by 2015. Two initiatives are working towards this: the KNOW group and accession to the Women’s Empowerment Principles:

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* It was used the average of base salary for each category by gender.
** There was no female trainee in the administrative area in 2012.

KNOW – KPMG’s Network of Women

Group of women with the mission to "encourage structured professional development" with greater retention of women in the organization, seeking conditions compatible with career opportunities, providing resources to encourage professional and personal development.

KPMG's Network of Women (KNOW ) – the group’s contributions in Brazil include monthly meetings with leaders, the pilot Mentoring program (KPMG case shared with other companies), the breastfeeding room, the reformulation of the maternity policy – from pregnancy until the child’s first year –, maternity leave of six months, external debates and events with female leaders, and KPMG’s participation in the movement +Mulher 360, the Brazilian Network of Women Leaders for Sustainability and the event Mulheres Rumo à Rio + 20.

The group's main goals for 2013 include:

- training mentors for the Mentoring pilot program

- holding lectures with a view to the professional development of women, focusing on networking, social networks and career planning

Women's Empowerment Principles GRI 4.12 - Joint initiative of the UN Global Compact and the United Nations Development Fund for Women (UNIFEM). KPMG in Brazil is a signatory to the principles for furthering promotion and the possibility of participating in a network of sharing policies and practices with a view to women’s equality and development.

Women's Empowerment Principles:

1. Establish high-level corporate leadership for gender equality.

2. Treat all women and men fairly at work — respect and support human rights and nondiscrimination.

3. Ensure the health, safety and well-being of all women and men workers.

4. Promote education, training and professional development for women.

5. Implement enterprise development, supply chain and marketing practices that empower women.

6. Promote equality through community initiatives and advocacy.

7. Measure and publicly report on progress to achieve gender equality.

Learn more www.unifem.org.br

Hiring locally

We give attention to local talent as a means of furthering the development of the communities we operate in and incorporating regional cultural knowledge into our business.

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*São Paulo and Rio de Janeiro are the states with the highest number of partners and partner-directors in Brazil, which is why we have presented the indices between three categories: State of São Paulo, State of Rio de Janeiro and other States.

Quality Services / Learning and Development

These programs are the focus of our investments in people and go beyond the professional regulations, encouraging continued education, graduate, post graduate and specialized courses, language courses, behavioral training, exchange programs and a variety of technical courses.

The KPMG Business School

is responsible for the planning and development program using virtual or on-site activities. There are Training Centers in São Paulo and Rio de Janeiro, where we concentrate the activities of learning and development, facilitating access and reducing costs.

Training and courses

Are segmented in order to develop different skills and capabilities:

Corporate training: - compulsory for all professionals. This develops behavioral skills, disseminates corporate norms and policies, such as Risk Management, Ethics & Independence and Data Privacy.

Core trainings: develops the technical knowledge and skills, by activity area, and develops the standard of excellence in providing services.Compulsory for all professionals

Professional training course: teaches the concepts related to the methodology for performing services in each professional area.

Specialization courses: develops specific issues, recommended by leaders, according to professional requirements and interests.

In June 2012 KPMG in Brazil was the first member firm in Latin America to implement CLIX, the new online courses platform for Learning & Development management. Already in use by KPMG's member firms in Europe and Canada, CLIX currently offers more than 200 courses.

In 2012, the valuation of hours of training performed by our professionals was considered in paragraph “a”. Based on that criterion we adjusted data from previous years for better comparison.

Policy for Continued Professional Education

The Federal Accounting Council (CFC) states that all technical professionals have to complete the Continued Education Program for a minimum of 120 hours every three years - an average of 40 hours per year - in order to guarantee they are up to date about the technical procedures essential for the quality of our services.

To maintain a team of excellence and high performance, KPMG goes beyond the requirements of the CFC program: our professionals received an average of 84 hours’ training in 2012. We also voluntarily extended the Continued Professional Education program to our professionals in the Administrative department.

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We improved the data collected in 2011, including the category "Apprentice". In previous years, the Apprentices were included in the category staff. In 2011, we corrected the allocation of 70 trainees in the technical area, since they had been mistakenly considered in the administrative area. From 2012 on, data collection is considering the training hours actually performed, instead of the total training hours offered.

KPMG Annual Trainee Program

We are committed to developing young professionals whose potential leadership and talents could be absorbed by KPMG or other companies. To achieve this we continually invest in our Trainee Program. In 2012 approximately 32,000 candidates participated in the selection process, and 530 were hired.

All of the trainees attend an intensive training program before they start working in different business areas, with the aim of developing our principles and quality standards, in addition to working on our values within the corporate citizenship context. The program amounted to 172 hours in the audit department.

Mobility and exchange

we want our professionals to have a global focus and vision for the future. We want them to reach their full potential and be able to develop their skills. The exchange of knowledge with professional practices abroad is part of the Learning and Development program. The Mobility Program comprises four modules, in which our professionals may gain access to different cultures and clients, acquiring a broad and in-depth understanding of our global structure.

Developing Leadership

As part of the succession process for our main executives, we implement specific learning and development programs for leadership, which prepare our professionals for their future responsibilities. The main programs in this context are the Chairman 75 and the Partner Development Program (PDS).GRI 4.7

Assessment and feedback / Career plan and evolution

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Our global career development policy is based on the principles of merit and equal opportunities. For such, we have counseling and annual assessments, to enable our professionals to accompany their performance, identify positive points and improve technical or behavioral aspects. Through the promotions, we recognize our professionals and their contribution to our business and make feasible our career and succession plan.

The professionals who display excellent performance are recommended to become members of the company, after being assessed by an external consulting firm, by members of the Executive Committee in Brazil, as well as senior partners from KPMG International.

We have the following feedback and assessment tools:

Dialogue

Participation: 76% of professionals participated in 2012, not including apprentices, temps and service providers. Participation levels were 96% and 73% in 2011 and 2010 respectively.

Stages: Goal Setting (establishes corporate and individual targets), Interim Review (assessment and fine-tuning of objectives) and Year End (final assessment of objectives established for the year).

Validation of the performance manager (professional in charge of monitoring an individual and providing career guidance).

This includes corporate social and environmental targets, as explained in the sub-item Corporate Citizenship/Environment.

Avaliation 360º

Participation: 96% of the target public (partners, partner-directors and managers) participated. Participation levels were 91% and 96% in 2011 and 2010 respectively

Stages: assessment by superiors, peers, subordinates and internal clients

Compensation

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Promotions and pay rises are determined by the performance assessment results and periodical surveys with the four largest companies in the sector for mapping out market practices.

Compared to the national minimum salary, the lowest salaries paid by KPMG in FY 2012 were at least 17% higher for the administrative team and 42% higher for the technical team.

Another important incentive is the Profit Sharing Program (PPL), which assesses the goals from the Dialogue system and the results of the Organization, business unit and the professional, throughout the year. The Employee Committee, which has an effective participation in defining their rules, helped to reformulated the new guidelines for 2013.

In the case of partners, including the Chairman, the same principles are adopted and remuneration is aligned to the profitability of the organization and the performance assessments, as well as the business and socio-environmental goals (the latter being educational).GRI 4.5

Focus on Individuals / Health and Quality of Life

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By creating the conditions that enable our professionals to develop their potential and obtain professional and personal satisfaction, we provide our services with excellence and create value for our clients.

This is a key issue to KPMG, because the success of people and business form an inseparable link.

Benefits

we offer a series of benefits that contribute to our professionals’ well-being.

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Mylife

This is our Quality of Life Program which encourages healthy habits, well-being and care of body and mind in our team members, encouraging them to balance work and quality of life, which is then reflected in our business.

Mylife has three pillars:

Culture and Entertainment - we promote special programs, options and discounts at artistic and cultural events. Besides being entertaining and relaxing, contact with culture, in its various forms, is an activity that increases perceptions, sensitivity and intelligence.

Healthcare - during the busy season we have developed a campaign with tips available on the intranet and communications on how to avoid stress, and we also have arrangements with gyms and farmacies.

Facilities - we offer services that facilitate the daily routine of our professionals, such as partnerships with restaurants, shops, hairdressers and others. We have also created a “classified” section on the Intranet, where they can announce the purchase and sale of goods and services.

In 2013 we are looking into reformulating these pillars which should focus on Healthcare, Recreation and Culture and Equilibrium. Other initiatives in the feasibility study are:

- Hiring a technical manager for Safety and Health area

- Pilot jogging/walking group

- Nutritional education program.

- Retirement preparation program.

- Ergonomic study.

- Corporate Travel Manual, with tips on health and safety for our professions during their constant travels.

 

Internal Environment / Organizational Climate

The organizational climate is one of the essential factors that enables us to retain talent and achieve our strategic object to be considered one of the best companies to work for. The management of the organizational climate at KPMG is undergoing continual improvement, consequently, every two years we implement the Global People Survey (GPS) which measures the motivation and satisfaction of our team.

The global People, Performance and Culture (PPC) team redesigned our research, to ensure it continues to be effective and up to date, monitoring the most significant issues for our professionals. The new version of GPS was applied at the start of the 2012-2013 financial year and enjoyed 83% participation, with 2,600 professionals replying.

Based on the annual results, each department’s leaders and respective business partners (Human Resources) design specific action plans for their reality, aimed at improving these indices. The Organization is committed to maintaining regular communication about the plans, so that its professionals can follow the progress of the proposed actions.

Stages of the Global People Survey (GPS)

Global People Survey (GPS) Brazil - 2012 Results

(Satisfaction Percentage – Scale of 0 to 100%)

Corporate Citizenship

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Corporate Citizenship derives from KPMG’s vision and values, and thus influences our strategy, our choices and our relationships with our stakeholders. We believe that business has a unique role and can contribute to resolve complex world problems, and that responsible practices and business help to encourage sustainable development.

Although our stakeholders have prioritized other themes, they are also interested in understanding the positive impacts generated by KPMG at the places where it works, and which go beyond the intrinsic benefits generated from its services. And it is this issue we consider in this topic.

As a company our role is to offer adequate solutions so our clients can develop their potential at each stage of the life-cycle of the business. This concern with the development of the maximum potential underpins our People Management work and embraces the community via our Corporate Citizenship initiatives.

Our operations in this area are based on a set of international initiatives already consolidated in the UN and the World Economic Forum, which we have agreed to voluntarily, as described below.

In the report Communication on Progress - COP KPMG International records the coordinated initiatives implemented by the member firms to consolidate the Global Compact principles.

United Nations (UN)

Global Compact

KPMG International has been a signatory to this initiative since 2002, by which companies sign up to ten principles embracing human rights, labors’ rights, the environment and combating corruption in business. The Compact recognizes that business, trade and investment companies are important pillars for a prosperous and peaceful world. It accordingly invites business leaders to contribute in the sphere of influence of their businesses.

The 8 Millennium Development Goals

An initiative aimed at encouraging people and companies to act in favor of positive changes in their local communities. Globally, we focus our actions on the first three of these: eradication of extreme poverty and hunger; universal access to primary education; promotion of gender equality and empowerment of women.

Leadership Development Programme (LEAD)

As a result of its effective engagement with the Global Compact and with various UN initiatives aimed at influencing public policies in the pursuit of equality, since January 2011, KPMG International has been a member of LEAD, a platform for corporate sustainability leadership, focused on helping companies integrate the ten principles of the Compact into their business.

Guiding Principals On Business and Human Rights

In 2012 we updated our Code of Conduct to incorporate the commitment to achieve principles 1 and 2 related to the human rights enshrined in the UN Global Compact. Incorporating these principles into our strategy and operations around the world will foster respect for human rights in our sphere of influence and support human rights and universal values wherever we operate. As a result of revising our Code of Conduct, current policies and procedures will also be revised - which include client acceptance and contracting suppliers - in order to put these principles into practice.

The World Economic Forum

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Unites business and political leaders, intellectuals and journalists to discuss and find solutions to the more urgent issues faced worldwide. KPMG International intensively participates in a number of its initiatives, which helped underpin our policies and practices and consolidate new parameters for companies’ operations.

Partnering Against Corruption Initiative

We signed the initiative in 2007, which means that we adopt and implement a zero-tolerance policy on bribery and corruption. This is a central concern of KMPG’s, as the quality and integrity of our professionals and our work are central to our reputation. We therefore clearly communicate to the Audit Management Committees, regulatory bodies, governments and our clients the measures we adopt to guarantee that we meet our professional obligations and responsibilities in terms of anti-bribery and anti-corruption.

The Principles of Responsible Capitalism

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We have been adhering to the principles since 2010, on the understanding that they constitute good practices for our business

Principle 1: Select responsible clients.

Principle 2: Promote responsible behavior among clients.

Principle 3: Fulfill our professional obligations with our Organization's clients.

Principle 4: Promote systematic risk management.

Principle 5: Engage with public policies.

Principle 6: Develop a new generation of leaders and professionals.

The Future Role of Civil Society

A project which aims to develop effective means of promoting collective work between communities, markets and governments. With this aim, we are developing comprehensive dialogue with nongovernmental and religious organizations, unions and business leaders, international and government organizations in order to:

- identify the main drivers and trends impacting society and their regional and global implications;

- understand the implications of the roles, responsibilities and relations between civil society, markets, international organizations and governments;

- explore new and emerging opportunities for society and develop an engagement framework looking ahead to 2030.

The report for this project will be presented at Davos in 2013 and will include guidelines on the construction of a resilient and dynamic economy.

These external commitments assumed by KPMG International are reflected in its member firms, so that as well as providing responsible and qualified services, they also generate benefits for companies, governments and society. A set of initiatives in the field of Corporate Citizenship involving volunteering, private social investment, investment by means of incentive laws and pro-bono services also positively impacts our communities.

Two global KPMG programs align our Corporate Citizenship initiatives with these international commitments: the Global Development Initiative (GDI), which deals with issues related to development and social justice and the Global Green Initiative (GGI), which addresses questions related to the environment and climate change.

The KPMG International Directory of Corporate Citizenship is responsible for defining, organizing and encouraging the guidelines and accompanying the performance of sustainability practices at the member firms, which set out their action plans and targets in accordance with local realities.

The Corporate Citizenship in Brazil strategy has three pillars, which underpin all of our initiatives: Education, Development and Environment. Our priority is to make them interconnected, generating positive effects on the three pillars.

Corporate Citizenship in Brazil - Strategy

Education

Education is an essential factor for our business and for the development of Brazil. Leverage of the full potential of the communities involves training and developing the skills of individuals. Consequently, we intend to work together with schools, universities and non-profit organizations to strengthen the skills of children and young adults. In practice, this support is also provided through projects that are detailed below.

Little Citizen Projecto

Description: a program that offers a four-year cycle of supplementary educational activities, medical and nutritional supervision, daily meals and sports activities.

Public: 220 children, aged between 10 and 14, from impoverished neighborhoods in São Carlos (SP), a city where we have one of our offices.

Objective: to encourage self-esteem, strengthen family ties and develop the intellect of the students.

Investment: R$ 585,000 by KPMG. São Paulo University (USP) offers the infra-structure for the project at the São Carlos and FUSP campus, which manages the project’s resources.

Involvement of KPMG professionals: interaction during the visits by the children benefited from the project to the KPMG offices in São Carlos and São Paulo, and at the project’s commemorative events. KPMG also contributes to the enhancement of the program and acts as advisor together with the pedagogical and coordination teams. The professionals from São Carlos also conduct pro Bono audit in the accounts of the project.

Bessan Award

In order to bolster the construction of the concept of meritocracy, we give study grants to middle schools at a private college in the region to those performing best in the Little Citizen Project. In 2012, four students received grants and the investment was approximately R$ 40,000.

Apprentice Nucleus

The pilot program was implemented in 2012 with the participation of 20 students. The program was designed to offer free places to young people who completed the Little Citizen Project on courses related to the labor market, preparing for interviews and employment in general held by Sesi and Senac. This aimed to incentivize the young people to prepare for their entry onto the labor market. The partnership does not generate any additional costs for the project or the students.

Students in Free Enterprise - SIFE/ENACTUS

Description:: A global non-profit institution operating in 39 countries aiming to incentivize university students to use their knowledge and entrepreneurial skills to develop programs which benefit their communities, with a focus on sustainability and social empowerment. In 2012, the institution revised its strategy and changed its name to better reflect its goals:

ENtrepreneurial -the ability to identify an opportunity and the talent to generate value from it;

ACTion -the desire to act and the commitment to go on and achieve it;

US -a group of people who consider themselves to share an important connection and be part of a much larger whole.

Investiment: R$ 50 mil.

Involvement of KPMG professionals: KPMG International is an official sponsor of the ENACTUS World Cup (2012-2014) and many member firms across the world support the institute locally as they believe that its work promotes future leaders' engagement with their communities' most pressing issues. KPMG professionals in Brazil participate on the board of the local institute, audit the counting of the results for the National Competition and advise the participating teams, when requested. We also provide three flights for the ENACTUS Brazil winning team to represent the country at the World Cup

Uniética

The event is held by the Business Ethics Institute with the aim to promote ethics, social responsibility, transparency and sustainability among young university students across the whole of Brazil. The 2012 program was held in Salvador, fulfilling its goal to travel around different cities and to recognize the achievements of students from the main cities across Brazil.

Investiment: R$ 20 mil.

KPMG in Brazil's Involvement: Focusing on one of the event's themes – corporate responsibility – in 2012 we accompanied the ENACTUS Brazil winning team to present their projects for empowering communities, as a means of inspiring new students and new leaders.

Junior Achievement (JA)

Description:An organization focused on practical education about the economy and business, that aims to encourage an enterprising spirit, stimulate personal development and facilitate access to the employment market for young people.

Investiment: R$ 100 mil.

KPMG in Brazil's Involvement:Our involvement with Junior Achievement (JA) began in 2002. This involvement became more intense in 2009, when we became one of the national sponsors of the entity, and started to encourage professionals to volunteer to introduce the economy and business programs in public schools. The project is aligned with our priority of encouraging an enterprising spirit and creating new and more responsible leaders.

We ended 2012 with twelve offices participating and around 100 volunteers from nine offices applied the Mini-company, Let's Talk About Ethics, The Advantages of Remaining at School and an Introduction to the Business World programs, which benefited 1,553 students throughout Brazil.

Our target for 2013 is to engage three new offices, helping achieve the objective of including all of KPMG's Brazilian offices in JA programs in the mid-term.

 

Bio-diversity in your rucksack – WWF Brazil

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Description: A pilot program on environmental education aimed at the Cerrado biome, sponsored by KPMG in Brazil and conducted by WWF Brasil with the support of Instituto de Permacultura e Ecovilas do Cerrado (IPEC) for public school teachers in Pirenópolis, Goiás. Lasting three years (2011-2013), the program has the potential to benefit 5,000 students from public schools each year. The project results will be presented by WWF Brazil to the Ministry of Education and the Ministry of the Environment as a contribution to be considered in public policy focused on environmental education.

Investment by KPMG in Brazil:R$ 144,000 in 2012, amounting to R$ 380,000 over the three years.

KPMG in Brazil's Involvement: The Corporate Citizenship team accompanied the development of phases I and II of the project, in which the local community and educators developed material to support the Program using their own experiences.

Development

The Global Development Initiative (GDI) is the basis for our activities for this development pillar, since it focuses on promoting and making feasible sustainable enterprises. Our global guideline helps us to view big challenges through the lens of opportunity and work together to achieve the Global Compact principles and the Development Objectives for the Millennium.

In Brazil, our way of collaborating towards development and improving the conditions of our communities is through the following initiatives:

Providing pro bono services or compensation

Making our professional skills available to tertiary sector organizations which contribute to mitigating or solving social challenges is the most relevant way that we have found to transform our knowledge so that it is of value within the communities where we operate.GRI EC8

By offering pro bono/compensation1 services, we link professionalism to management and credibility and transparency to financial statements for not for profit organizations which operate in various locations around the country. We are contributing to their development and we provide improved conditions for them to continue with their activities in this way.

This work is subject to the standard procedures for acceptance of clients and the same methodology, quality and independence offered to paying clients.

1 Services provided to NGO and nonprofit institutions. The amount for the services provided is paid by the Corporate Citizenship team to the KPMG area responsible for the rendered service and the organization benefited accepts to undertake an action previously agreed as compensation for the services provided.

Private social investment

In alignment with our strategy of promoting growth, the focus of our direct investments is on initiatives which promote social development.

Unicef

KPMG has Unicef as a strategic partner for the Corporate Citizenship initiative globally, with its work towards justice and social development

For this reason, in 2011 we financed the development of InfoCriança, a system which seeks to offer a database with the main social statistics related to the standing of childhood and adolescence in Brazil, is reliable and easy to use and available to students, researchers and the general public. Available for free online (www.infocrianca.org.br), the site went live in 2012.

KPMG's support for Unicef focused on the Urban Center Platform (PCU) in 2012, which assists the municipalities to transform the Statute for Children and Adolescents' principles into concrete actions to protect every child's rights. PCU also aims at creating a synergy between policies and programs implemented by the government and civil society within the realm of childhood and adolescence.

The PCU should be used as an example for developing similar initiatives around the country and in other parts of the world, as it allows the construction of a convergent effort between the government and civil society, with an effective model of social development, while receiving support from private initiative.

Investment in 2012: R$ 50 mil.

KPMG in Brazil's Involvement: Sponsorship running through to 2013 and monitoring of results by the Corporate Citizenship team.

Millennium Villages

The project consists of finding solutions for developing ten sub-Saharan cities in Africa, and has various international partnerships, including KPMG International and 14 of its member firms, including Brazil

Lasting five years, the project is working towards empowering the local community and rendering it sustainable, generating solutions that address problems such as hunger, disease and illiteracy.

Investment and involvement of KPMG in Brazil: USD 5,000 / year, starting in 2011. We invested approximately R$ 10,000 in 2012.

Social, Cultural and Sporting Investment through Fiscal Incentive Laws (IRPJ)

KPMG is abreast of the opportunities offered by the Government to encourage the allocation of resources to cultural projects and institutions that offer services to the community. Every year we assess projects that are aligned with our Corporate Citizenship and Marketing strategies. GRI EC4

The Recycling Institute for Adolescents (Reciclar)

Instituto Reciclar is a non-profit organization whose mission is to provide professional educational and learning opportunities to young people in a position of vulnerability and social risk, which promotes their self-esteem, social inclusion and full exercise of their citizenship. The Institute benefits approximately 150 young people from the community of Jaguaré in São Paulo every year, directing them to the labor market after five years of solid humane and professional training.

Investiment:R$ 51,000 via FUMCAD and R$ 30,000 via private investment.

"Noturno Cadeirante" - wheelchair user's show

The show aims to raise awareness and break paradigms with regards to the artistic capacity of people with disabilities. Use theater, dance and music as instruments to include, develop and create an artistic work opportunity for people with disabilities

Investiment: R$ 191,000 via Rouanet Law.

Quero-Quero Project

Promotes initiatives in favor of cultural, social, psychological, cognitive and affective development of 180 children and adolescents from impoverished neighborhoods in Campinas. The project improves the quality of life of these children and helps turn them into good citizens.

Investiment: R$ 29 mil via FUMCAD.

Cultural Book – The Earth, Water, Air and Fire Program: "Man and Water"

A series of four books which aim to show man's interaction with these four natural elements. We edited the second book in the series, "Man and Water" in 2012, which was given to our clients as a gift at the end of the year.

Investiment: R$ 129,000 via Rouanet Law and R$ 71,000 via private investment.

Voluntary work

KPMG wishes to lead by example and create a network of multipliers in favor of social-environmental development. We accordingly encourage our professionals to be good citizens and do volunteer work.

In addition to working in the Junior Achievement programs, our professionals can also participate in two other activities that occur annually:

KPMG Community Day

Is an initiative that involves professionals from all of the KPMG offices in Brazil, in citizenship actions to meet the specific needs identified in their communities.

Trainee Challenge

Launched in 2008, it is a part of the Training Program applied to these young professionals and has the important role of placing them in KPMG’s corporate citizenship culture.

Trainees are challenged to meet a variety of needs within our communities, such as: donating blood, helping the elderly, adolescents and children, education, revitalizing common areas in public and private institutions, environmental awareness, amongst others. Due to the redesign of the Trainee Programs, the Challenge was held along with the KPMG Community Day in 2012 and the results are therefore being reported together.

Specific Programs, emergencies and disasters relief

Natural disasters and emergencies that affect our communities ultimately affect our people and our business. Our capacity for mobilization and action at these critical moments can make the difference and lead to comfort for those affected or assisting with the management of recovery processes for afflicted communities

This system for planning the most appropriate action to be implemented in each situation is coordinated by the Global Citizenship Leader of KPMG International.

In 2012, we faced a number of crisis situations, both internationally and locally. Professionals from various offices also acted in specific situations, at our own initiative or at the request of external institutions.

Some results of KPMG's campaigns in Brazil during 2012

We allocated R$ 12,000 to the Caring Christmas campaign in São Paulo, which involved afternoon tea and a Christmas party for the care home and shelter participating, as well as the purchase of adult diapers and milk for a month's use at the respective institutions. Our professionals in São Paulo also donated presents to 201 elderly people and children at these institutions. In addition to this, we donated more than 270 Christmas food parcels to the institutions Casa Naim, Todo Mundo Feliz, Casa dos Velhinhos de Ondina Lobo, PROAV and CEBASP.

Following mobilization organized by SESCON-RJ, we contributed R$ 3,600 to assist the accountancy firms which were affected by the buildings which collapsed on Avenida Treze de Maio, which is a central region of Rio de Janeiro.

We invested R$ 31,000 in the KPMG Community Day and Trainees Chalenge, in the form of a reimbursement to cover part of the expenses for each coordinator and their team for implementing activities at the selected NGOs, in addition to the rides, snacks, recreation and revitalizing.

We contributed R$ 15,000 for a Charity Dinner which was organized by Fundação Gol de Letra in Rio de Janeiro.

We donated 128 second-hand notebooks and 32 desktop computers, which were in perfect working order, to promote digital inclusion at 16 institutions which are registered by KPMG in Brazil. With the exception of the Little Citizen Project, all of the other institutions which were assisted were nominated by our professionals

We allocated approximately R$ 12,500 to the Red Cross in Brazil to be sent to the victims of floods which occurred in the State of Acre. R$ 2,433.58 of the total was donated by our professionals and R$ 10,000.00 by KPMG

We donated R$ 9,000 to the Soup Group, giving items such as blankets and food. Approximately 50% of this total was donated by our professionals. The Soup Group assists those living in the streets who are at risk, carries out assessments and makes referrals for treatment and detoxification for chemical dependents

The ITAS RC team in Brazil, along with those from a further 24 KPMG offices around the world, took part in the 5th Global Citi ITA S Community Service Day, which focused on the Millennium Development Goals. We focused on promoting education locally and donated 99 books (new and used) to the Little Citizen Project library in São Carlos.

An event which was held by the Tax area, the Guide to Fiscal Incentives for Research and Development – Adding value to the Americas, transferred the total registration value (R$ 4,500) as a donation to the Locomotive Project in Santo André.

“I would like to thank you for the invitation given to Syngenta so that we were able to take part at the event, which was held on Wednesday. The information presented and the opportunity of hearing from Lead Partners Global and LATAM directly about PD&I incentives in other countries was extremely useful. Thank you! Without forgetting to mention that I thought the presentation by the children from the Locomotive Project was sensational. KPMG already positively surprised us with their work during 2011 and continues adding more value to what is done when showing concern with the principle of social responsibility. Congratulations!"

Viviane Shiraiwa Rinaldi
Syngenta / Tax Planning Analyst – SBS – Finance

Supplier Management

GRI HR2 EC6

Contracts of service provision and in São Paulo (building management and maintenance, reception, cleaning, catering, motorcycle courier, technical support services and asset security) which are considered significant and concentrates about 70% of all outsourced people in Brazil. Thus, aligned with our principles and the International Labor Organization’s conventions, such contracts contain clauses which require employment under Brazil’s CLT regime or that meet specific labor legislation. Payment of these suppliers is only made upon presentation of monthly documents that provide evidence of the employment relationship. In 2012, no contract with suppliers of goods or services was refused due to a negative evaluation arising from violation of human rights.

In 2012 we began to implement our goal of including specific contractual clauses on Human Rights and anti-bribery in the standard draft documents and in the documents requesting proposals from suppliers of goods and services. Our internal policy which states that any contract above R$ 1,000 must be centralized at Purchasing area, and the advice of our Legal area in reviewing the contracts will help us to move forward to achieving that goal. We will continue to evolve in this area during 2013, mapping our principal suppliers and adapting internal procedures so that we may put the commitment taken on by KPMG International with the UN’s Guiding Principles on Human Rights into practice, bringing the theme of human rights to KPGM’s strategic sphere, which will influence the process of client acceptance and engagement continuance.

Meanwhile, an international group called Sustainable Procurement is developing a Suppliers’ Code with basic guidelines that the KPMG International member firms can adopt.

Our Code of Conduct and GQ&RM Manual underpin all of our practices, including in the administrative areas, but do not include a specific policy for hiring local suppliers. In general purchases are made by our São Paulo office and, when economically feasible, are made regionally, as in the case of cleaning materials and cleaning services.

The data for 2009 and 2010 has been recalculated, given the improvement in collecting the information. Calculation base: purchases by the Facility, IT, Marketing and Infra departments. The criterion of “local provider” in this calculation is defined by county, ie.suppliers located in the city where KPMG has an office and/or the city in which some event was held.

Environment

GRI EN18

Global commitments and goals

From the perspective of our services, KPMG has a Global Center of Excellence in Climate Change and Sustainable Services (CC&SS) to assist our clients, in this complex and changing environment in which we live, to understand not only the challenges, but also the opportunities that, when well-managed, could provide competitive advantages in this transition to a more sustainable development model.

We have also considered this internally, and in response to the challenges imposed by climate change, in 2008 KPMG International launched the Global Green Initiative (GGI), with one of its objectives being the reduction in the combined carbon footprint per capita of the member firms. In 2010, GGI reported a decrease of 29% in carbon footprints compared to 2007, exceeding the goal established. A total of 42 member firms from KPMG International – including Brazil – participated in this report, which represent 86% of our personnel worldwide.

In 2011, a new global goal was established: by the year 2015, we should achieve a 15% decrease in the combined carbon net emissions per capita of the member firms, compared to 2010. The overall reduction in the first year was 1.1%. The overall emissions in 2012 are still being calculated and should be published in April 2013. This ambitious goal will be achieved through:

- sustainable technologies.

- responsible travel.

- the option for renewable energy.

- neutralization of our emissions, based on the purchase of certified reductions in emissions, particularly those that are available on markets regulated by the Kyoto protocol, as is the case of the European Union.

In Brazil, our goal for 2012-2013, was to identify projects that have a carbon component, but which make a tangible contribution to the environment and society. We understand that carbon is an important item, but its contribution to sustainable development, in a clear and calculable form, is indispensable for investments. However the new economic reality has led to the need for adjustments to the entire Organization and obliged us to temporarily suspend the project.

In 2012 KPMG International also undertook the commitment The Carbon Price Communiqué, an international initiative whereby companies around the world state their positions and request global policies to address the challenges posed by climate change. Part of the series of notices published by Climate Communiqué in 2012, The Carbon Price presents the pricing of carbon emissions as one of the main components that could help reduce global emissions.GRI SO5

The Environmental Policy in Brazil

GRI EN28

Environmental matters are not relevant o our activities and business as we operate in the services segment. We have not therefore incurred any judicial or nonmonetary sanctions as a result of environmental noncompliance during the period covered by this report.

Nevertheless, we are aware of our responsibilities and maintain a citizen approach, since we understand that we also have a role to play to consolidate a more balanced and fair development model. Thus, the Organization keeps an environment policy and goals to reduce some indicators.

The Global Green Initiative (GGI) is the basis for our local environmental policy, which defines our commitment to improve the environmental performance of our business through coordinated actions that reduce our carbon footprint emissions per capita, and focus on conscious consumption of natural resources and decreasing the generation of residues, as well as the challenge to have a positive influence on clients, professionals and the community.

KPMG is therefore growing in Brazil and extending its operations with new offices, which is the reason for the increase in total consumption of the majority of the indicators.

The results of our actions and our dilemmas are presented in this sub-item.

*FTE = Full Time Equivalent, measure adopted by KPMG International to indicate the consumption per capita. The average number of employees used in the calculation was provided by KPMG.

Environmental Education

The environmental performance of our business depends on the engagement of our people. Through constant dialogues with our professionals, we provide information, suggest changes in habits, get them involved in initiatives and publish the results.

Environmental Week - 437 professionals participated in the sustainability e-learning in this campaign, and competed for various prizes, such as I-Pads, magazine subscriptions, books and DVDs related to environmental issues.

2nd Edition of the Living Green Gallery - Our professionals' children, aged between 4 and 12, were encouraged to make a photographic register of the beauty of the environment and the challenges and opportunities to keep it sustainable. Our professionals voted via the intranet and selected the best photos in two categories: best photo and most creative photo. The winners got a Nintendo Wii and a Nintendo 3DS.

Bio-diversity in your rucksack – Pilot project sponsored by KPMG and conduct by WWF Brasil aimed at influencing educators and students from the public schools on pertinent questions which involve sustainability, as described in the Education section.

Water and Man – Sustainability in the four elements of nature - Second book in a series four volumes. The first was Earth, published in 2011. The book is given as a gift to clients at the end of the year. This is an example of how environmental issues are being discussed and considered in KPMG's other areas, and go beyond our internal environment.

Controlling emissions

GRI EN16 | EN17 | EN18

Due to the services sector in which we operate, our main impact on the environment arises from the emission of greenhouse gases. For this reason, in line with the global commitment to reduce GHGs (greenhouse gases), since 2007 KPMG in Brazil has compiled a carbon inventory and monitored its emissions annually. We accordingly identified that our most significant impact is in Scope 3 (indirect emissions on which we have no management, or management is limited), mainly due to the displacement of our professionals by air or ground transportation. GRI EN29 EN16 EN17 EN18

Transporting our professionals to the clients' premises is intrinsic to the type of service we provide, and represents the main dilemma faced, since, in the majority of cases, the activities have to be performed at the client's premises. Our 26 offices attend locally which reduces long-distance travel and therefore emissions too.

It is worth noting the increase in training via Web, the availability of audio and videoconference resources for meetings and the improvements in IT tools, which enable professionals to remotely access our network environment are initiatives we are implementing to avoid trips when possible.

Greenhouse Gases (GEE) Inventory Composition

The data refers to the period January to December of each year. The method for this inventory was developed by KPMG International based on the GHG Protocol and DEFRA Reporting Guidance.
- KPMG revised the data for reimbursement of transport to clients in 2010 (scope 3), which was updated based on the 2011 report.
- In 2011 the decrease in emissions per capita was due mainly to the increase in the number of professionals in our Offices.
1 Following the assumptions from GHG Protocol, these emissions were not included in Scope 1, since the gas HCFC 22 is not included in the Kyoto Protocol.
2 The average number of employees used to calculate the emissions per capita/by professional was provided by KPMG International.

Energy Consumption

GRI EN3 | EN4

Even if Brazil is a global leader in the supply of clean sources for energy generation, this resource should be used consciously. To this end, we make our professionals aware of the need to change habits, we encourage attitudes that avoid waste, we adapt our premises to avoid unnecessary consumption (such as installing presence sensors) and we analyze the energy consumption when acquiring new electronic equipment.

Total energy consumption has increased at KPMG as a result of the growth in its business and in the number of offices in Brazil. Despite this we have made efficiency gains, as can be observed in the reducti on in electricity consumption per capita.

1 Diesel was recalculated in 2010 and 2011, in accordance with consumption considered in Scope 1 of the emission inventory.
² The average number of employees used to calculate the emissions by Professional was provided by KPMG International.

In Brazil, we buy electricity from public services providers only.

The energy generation matrix in our country is predominantly renewable, which accounted for 88% of 2011 public offering.

(Source: Resultados Preliminares do Balança Energético Nacional 2012 – BEN 2012).

1 Includes coke oven gas.
2 Hydro.
3 Include firewood, sugarcane residue, detergents and other recoverable sources.

The 2012 per capita calculation for water consumption as well as for direct and indirect energy takes into consideration the average number of professionals in provided by KPMG International. This criterion is adopted in order to keep consistency of the Brazilian information with the methodology adopted by KPMG International in its global GHG inventory.

Consumption of materials

GRI EN1 |

Paper - a significant item as it is inherent to our business segment. To reduce this consumption, we are seeking to innovate our working methods. An example of this is the tool Caseware, an electronic data bank that minimizes the use of physical files, in hard copies. We obtained a similar result with eAudIT, which enables the electronic mapping of audit evidence, such as contracts, proposals and invoices, which has almost eliminated the use of paper. Similarly, the change in the way we print our reports and proposals to clients, implemented in August of 2012, as well as the adoption of electronic Christmas cards, were also actions aimed to use paper more responsibly. Nevertheless, the use of paper rose significantly in 2012, mainly to the increase in number of external business publications, calendars and diaries.

Laptops - comprise another significant and essential material for our activities. KPMG adapts its equipment annually, and specifically in 2011, this procedure had a greater impact given that almost 1,000 employees joined KPMG in Brazil, as a result of the acquired operations. This index dropped sharply in 2012.

The laptops that are obsolete for our activities are categorized based on their possible future use: disposal/return to producer, sale of parts for reuse, donation to community or auction to our professionals.

Water consumption

GRI EN8 | EN9 | EN10 | EN21

In 2012, we consumed 25,451 cubic meters of water, derived from municipal supply networks. The figures demonstrate an increase compared to the consumption in 2011, which was 19,035 cubic meters, mainly due to the increase in the number of employees and the opening of new offices. KPMG does not reuse or recycle water, and still does not have plans to implant reusing of water. The water consumed in our 26 offices is provided by local public service, and our waste is captured by the receptor systems from the public network, in accordance with the environmental legislation applicable to our segment.

In addition to encouraging more responsible use of water, since 2009, our infrastructure area has worked to improve the performance of this indicator, installing equipment to reduce tap leakage in bathrooms, and at the São Paulo offices, a routine has been introduced to water the gardens every other day, and wash the stairs every fortnight.

2 Water consumption at KPMG at offices outside of São Paulo is allocated by the condominiums where they are located. To calculate total consumption, we used the average consumption per employee in São Paulo and extrapolated this figure to the Rio de Janeiro office. This same method was used for the other locations based on the number employees at the Goiana office, which is more consistent with the size of the other offices - and always based on the number of employees at each office.

Disposal of residues

GRI EN22

Today, in 16 of the KPMG offices, including the four buildings in São Paulo, the paper consumed (our main residue) is recycled – complying with the confidentiality rules – thus avoiding the impacts of disposal. The São Paulo offices have also implanted the selective collection of cardboard, plastic, aluminum and glass, which is properly disposed of (recycled, incinerated or deposited in sanitary landfills) by a contracted company.

In 2012 we hired a firm specializing in the collection and appropriate disposal of electronic waste in São Paulo, where our main office is located. Another company handles the disposal of the diesel consumed by the generators at the São Paulo offices. KPMG's other offices do not have such generators.

In recent years we have sought to improve the management of this process and the relationship with these companies, requesting guarantees for the control over the residues generated and the correct final disposal of such.

With respect to amplifying these policies, we observed more efficient results at the São Paulo offices, which has its own administration. In the other regions, we have to face the challenge of involving the condominiums where the offices are located, to ensure that our residues are being appropriately disposed of.