Climate Change Data

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Human Capital
• Digital Innovation
• Social Responsibility
• Environmental Sustainability

Environmental Achievements

• Reused 73% of co-products, generating R$338 million in revenue.
• Recycled 12 million tonnes of scrap steel.
• 72% of steel produced from scrap.
• Reused 97.7% of water.
• Used a bioreducer (charcoal from planted forests) to substitute carbon in some blast furnaces.
• Generated part of its energy in Brazil at its hydropower plant.

Social Achievements

• R$ 19 million invested in social projects.
• Launched a project to foster diversity, focusing on gender equality.
• Became a signatory to the UN Women’s Empowerment Principles.
• Partnered with TETO to build 2,000 houses.
• Supported the Mão Certa Program to combat sexual exploitation of minors.
• Supported the expansion of Modesto J. Cerrato Technical School in Argentina.
• Managed a technical school in Peru, graduating over 1,000 students.

Governance Achievements

• Appointed Gustavo Werneck as CEO in 2018.
• Members of the fifth generation of the Gerdau Johannpeter family transitioned to exclusive Board of Directors roles.
• Administered anti-corruption training programs.
• Disseminated a policy on relations with government officials.
• Investigated 361 reports through an anonymous communication channel.

Climate Goals & Targets

Environmental Challenges

• Slowdown in the construction industry.
• Pressure from imported goods in North America.
• Deconsolidation of the operation in Colombia.

Mitigation Strategies

• Divestment plan to focus on more profitable assets (R$ 6.3 billion in economic value over four years).
• Digital innovation to improve efficiency and reduce costs.
• Restructuring in North America to focus on higher-margin markets.
• Exporting part of its production to ensure profitability.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: International Integrated Reporting Council (IIRC)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environmental Sustainability
• Social Responsibility
• Governance

Environmental Achievements

• Reduced greenhouse gas emissions to about half the global steel industry average.
• 73% of steel produced from recycled scrap.
• 80% of production based on recycled or renewable raw materials.
• 11 million tonnes of scrap transformed into steel annually.
• Production model utilizes charcoal from planted forests, resulting in lower greenhouse gas emissions.

Social Achievements

• Not disclosed

Governance Achievements

• Established Strategy and Sustainability Committee in 2019.
• Included ESG performance targets in Long-Term Incentive Plans for senior executives in 2021.
• Greenhouse gas inventory data subject to independent external audit.

Climate Goals & Targets

Environmental Challenges

• Lack of mature technologies and public policies to aid in neutralizing carbon emissions.

Mitigation Strategies

• Investments in new technologies and open innovation.
• Expansion of forestry base and investments in renewable energy.
• Higher use of scrap in production.
• Greater energy and operational efficiency.
• Collaboration with industry organizations, universities, and research centers.
• Streamlining production processes and investing in clean and renewable energy matrices.
• Dialogue and joint development with society to implement public policies and improve industrial processes.
• Seeking access to special financing lines for developing disruptive low-emission steelmaking technologies.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Independent external audit

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• B- rating from CDP Climate Change module.
• Recognition as among the best performers in greenhouse gas emissions by worldsteel.
• First steelmaker included in the Carbon Efficient Index (ICO2).

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity, Equity, and Inclusion (DEI)
• Occupational Health and Safety
• Community Relations
• Waste Management and the Circular Economy
• Energy Management
• Water Stewardship
• Ethics and Corporate Governance
• Supply Chain Management
• Biodiversity

Environmental Achievements

• Reduced GHG emissions intensity (scopes 1 and 2) to 0.91 tCO2e/t of steel (still less than half the global sector average)
• 93% reuse of co-products
• 98% of water used in production reused
• 66% of electricity from renewable and low CO2 emission sources
• 70% of steel produced from recycled scrap (11 million tons recycled annually)
• Approximately 16 million tCO2 sequestered in planted forests and 3 million tCO2 in native forests

Social Achievements

• Invested R$ 59.6 million in social initiatives, benefiting over 2 million people
• Renovated 1,264 precarious homes in Brazil
• Supported 3,821 businesses through entrepreneurship projects
• Mobilized 7,514 employee volunteers
• Achieved 27.6% Black representation in leadership positions in Brazil (target 30%)
• Achieved 26.1% women in leadership positions globally (target 30%)
• Achieved 5% representation of people with disabilities in Brazil workforce

Governance Achievements

• Adherence to Level 1 corporate governance standards of the São Paulo Stock Exchange (B3)
• 99.4% of employees received training on Code of Ethics and Conduct, 98.2% on anti-corruption
• Executive compensation linked to ESG performance
• Independent Oversight Board monitoring management activities

Climate Goals & Targets

Environmental Challenges

• Steel imports from Asia (mainly China) priced below production costs
• Complex global geopolitics
• Water stress in some operational areas
• Supply chain disruptions

Mitigation Strategies

• Investing in process decarbonization and using scrap metal as main input
• Adapting to diverse developments and improving efficiency
• Implementing water recirculation programs
• Developing alternative sourcing strategies
• Strengthening supply chain management policies

Supply Chain Management

Supplier Audits: 100% of critical suppliers evaluated on environmental and social impacts; annual audits on selected suppliers

Responsible Procurement

• ESG clauses in purchase orders
• Code of Ethics and Conduct for Third Parties
• Supplier screening against social and environmental criteria
• Ecoar project engaging suppliers in climate management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Water shortages

Transition Risks

• Regulatory changes
• Market shifts
• Failure to adapt to technology changes

Opportunities

• Development of energy-efficient products
• Increased use of renewable energy sources
• Gerdau Next new businesses

Reporting Standards

Frameworks Used: GRI (version 2021), SASB (Iron & Steel Producers and Metals & Mining)

Certifications: ISO 14001 (21 of 29 steel mills)

Third-party Assurance: Bureau Veritas

UN Sustainable Development Goals

• Goal 7 (Affordable and Clean Energy)
• Goal 8 (Decent Work and Economic Growth)
• Goal 9 (Industry, Innovation and Infrastructure)
• Goal 10 (Reduced Inequalities)
• Goal 11 (Sustainable Cities and Communities)
• Goal 12 (Responsible Consumption and Production)
• Goal 13 (Climate Action)

Gerdau's initiatives contribute to these goals through various programs and actions detailed in the report

Sustainable Products & Innovation

• Gerdau GG 70 rebar
• New nail packaging using Poly-G
• 1141 and 4142 Steel
• Gerdau 10” Rolled U Profile
• A and W Spacers
• Gerdau High-Strength Flat Bars
• DNV GL 485 FDU thick steel plates

Awards & Recognition

• Company of the Year (Valor 1000)
• Best company in Brazil in ESG/Socio-environmental (Época Negócios 360°)
• Numerous other awards listed in the report