Climate Change Data

Environmental Metrics

ESG Focus Areas

• Air emissions
• Employee and contractor health, safety and well-being
• Decarbonization
• Compliance, ethics, transparency and integrity
• Corporate governance
• Operational technologies
• Supplier social and environmental criteria
• Impact on local communities
• Waste management
• People management and development
• Diversity and inclusion

Environmental Achievements

• Reduced greenhouse gas emissions in 2020 compared to 2019 due to lower production volumes (resulting from the pandemic).
• Recycled approximately 50% of total waste volumes in 2020.
• 99% of metal feedstocks derived from recycling in 2020.

Social Achievements

• Launched ImpulsaT program in Mexico to accelerate the careers of young university graduates.
• Administered a training program in Brazil to prepare youth for the job market (all participants were hired).
• Established a COVID-19 Screening and Testing Center serving over 40,000 people.

Governance Achievements

• Revised the rules of procedure of the Strategy & Innovation Committee, Governance & People Management Committee, Audit & Risk Committee and Audit Board in 2020.
• Tasked the Governance & People Management Committee with supporting Management in addressing Environmental, Social, Governance and Data Protection (ESGD) issues.
• Revised the Company’s Bylaws to comply with Novo Mercado listing rules.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impacted operations, creating challenges in maintaining supply to customers and managing fluctuating demand.
• Supply chain disruptions due to the pandemic affected different countries and continents to varying degrees.

Mitigation Strategies

• Reorganized operations to match inventories to fluctuating demand.
• Implemented several changes in production processes in Brazil and Mexico (relocation of products and tooling, process redesign, etc.).
• Concentrated production in more efficient lines, improving competitiveness and supporting customer continuity.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier Management Policy with stringent guidelines based on social and environmental standards and applicable regulations; use of NIMBI platform for supplier onboarding and request-for-quote processes.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI Standards

Certifications: IATF 16949, ISO 9001, ISO 14001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• 1, 3, 4, 5, 7, 8, 9, 10, 11, 12, 13, 16

Not disclosed

Sustainable Products & Innovation

• Components used in engines running on biomethane, compressed natural gas and other types of biofuels.

Awards & Recognition

• Ser Humano award (Transformadores Tupy program)

Environmental Metrics

ESG Focus Areas

• Atmospheric emissions
• Health, safety and well-being
• Decarbonization
• Ethics and compliance
• Corporate governance
• Innovation, process and product
• Sustainable supply chain
• Impacts on local communities
• Waste management and circular economy
• Developing people
• Diversity and inclusion

Environmental Achievements

• 17% reduction in the intensity of GHG emissions (Scope 1 and 2) compared to 2021
• 38% reduction in Particulate Matter (PM) emission rate compared to 2021 (existing operations)
• 93% reuse of industrial and sanitary effluents
• More than 1 million tons of recycled waste
• 650 thousand tons of scrap metal transformed into high value-added products
• 93% of the metal materials used in our production process were from recycling

Social Achievements

• 19.2 thousand people impacted by social investments
• 970 hours of volunteering
• BRL 2.1 million invested in social projects
• 5,821 new hires in the year
• BRL 9.8 billion added in economy
• 389 thousand hours of employee training

Governance Achievements

• Creation of a Sustainability Committee (CSus)
• Approval and disclosure of the Anti-Corruption and Anti-Bribery Policy
• Approval and disclosure of the Business Pact for Integrity and Combating Corruption
• 16.4 thousand employees trained in the Code of Ethics and Conduct
• ESG goals linked to executive bonuses

Climate Goals & Targets

Environmental Challenges

• Imbalances in supply chains resulting from the impacts of the COVID-19 pandemic, conflict in Eastern Europe and lockdowns in China
• Significant increases in material costs and customer stoppages
• Unavailability of scrap metal in the domestic market

Mitigation Strategies

• Investments in new foundry and machining programs, increased operational efficiency and synergies between operations
• Implementation of a new ERP system
• Investments in health, safety and the environment
• Debt issuance to fund acquisitions
• Continuous improvement of processes and procedures to mitigate and monitor atmospheric emissions

Supply Chain Management

Supplier Audits: Environmental and quality audits carried out at the supplier's plant for specific cases

Responsible Procurement

• General terms and conditions of supply
• ESG criteria evaluation for high-impact suppliers
• Anti-corruption practices clauses in supply terms

Climate-Related Risks & Opportunities

Physical Risks

• Changes in precipitation patterns (prolonged droughts)

Transition Risks

• New regulations (CO2 emission limits)

Opportunities

• Replacement of mineral coke by biomass briquette
• Forest conservation
• Development of new low-carbon products

Reporting Standards

Frameworks Used: GRI (2021 version), IIRC, SASB (Metals and Mining segment), TCFD

Certifications: ISO 14001, ISO 45001, ISO 50001

Third-party Assurance: Independent third-party audit for GHG emissions and financial results

Sustainable Products & Innovation

• Biogas generator set
• Photovoltaic lighting towers
• Vehicle transformation to biomethane and CNG engines
• Ultra Light Iron Block

Awards & Recognition

• Best of ESG 2022 Award (Exame)
• Volkswagen Award
• Innovation Award (Fapesc)

Environmental Metrics

ESG Focus Areas

• Decarbonization
• Diversity and Inclusion
• Circular Economy
• Sustainable Supply Chain
• Community Impact
• Corporate Governance
• Innovation
• Health and Safety

Environmental Achievements

• 40% lower Greenhouse Gas (GHG) intensity than the global average for the steel sector in 2023
• 95% of metal material used came from recycling
• 83% of water used came from reuse
• 18% reduction in particulate matter emissions compared to the previous year
• 5,110 tonnes of CO2 emissions prevented through the use of recycled coke
• More than 1.1 million tonnes of waste recycled

Social Achievements

• First Diversity Census conducted, involving approximately 14,000 respondents
• 433,000 hours of employee training
• 29% reduction in accident frequency rate
• R$2.8 million invested in social impact initiatives benefiting 18,676 people
• 2,123 hours dedicated to voluntary work
• Developed a Diversity and Inclusion (D&I) Standard

Governance Achievements

• 100% of employees received information on anti-corruption procedures and policies; 6,000 received specific training
• Renewed participation in the Business Pact for Integrity and Against Corruption
• All members of the Board of Directors meet the independence criteria

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions (implied)
• Meeting growing demand for sustainable solutions while maintaining competitiveness

Mitigation Strategies

• Investing in technological innovation, including lighter metal alloys, biofuels, hydrogen, and circular economy solutions
• Developing complete and customized solutions for decarbonization (Bioplants)
• Investing in research and development in battery recycling and hydrogen fuel
• Implementing energy efficiency projects and using recycled coke

Supply Chain Management

Supplier Audits: 25.3% of new suppliers considered environmental criteria

Responsible Procurement

• Supplier Management Policy
• Supplier Manual
• Code of Ethics and Conduct

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products
• Battery recycling
• Hydrogen fuel

Reporting Standards

Frameworks Used: GRI Standards 2021, IIRC, SASB (Metals & Mining and Industrial Machinery & Goods industries), TCFD

Certifications: ISO 14001 (100% of sites), Zero Waste (São Paulo site)

Sustainable Products & Innovation

• Bioplants
• Biomethane engines and generators
• Ultralight Iron Technology
• Hydrogen Engine
• Biomass Briquettes
• Battery Recycling

Awards & Recognition

• Best and Largest 2023 (9th in Steel, Mining and Metallurgy sector)
• Valor Inovação (4th in Capital Goods category)
• National Innovation Awards
• Santa Catarina Innovation Award
• Ranking 100 Open Startups 2023 (8th in Mining and Metals category)
• American Foundry Society Awards (Howard F. Taylor Award)
• Exame Best ESG