Gerdau is shaping a more collaborative, inclusive and sustainable future

by Ana Lopez

Gerdau is a multinational steel producer focused on recycling scrap steel. Each year, the company converts millions of tons of scrap into new steel products, promoting sustainability while reducing production costs.

I recently spoke with Gustavo Werneck, CEO of Gerdau, about why sustainability and environmental issues are so important to Gerdau, the company’s labor practices, and also how being publicly traded influences the company’s decision-making.

Werneck has been CEO of Gerdau since January 2018 and a member of the board of directors since 2019. Previously, he was head of Gerdau Aços Brasil, the company’s flagship company in Brazil. See below for our edited online discussion.

Christopher Marquis: Why are sustainability and environmental issues important to Gerdau?

Gustavus Werneck: Gerdau’s company is built around recycling and sustainability. Many of our plants use scrap-based electric arc furnace (EAF) technology, reducing demand on natural resources and minimizing greenhouse gas emissions, in addition to reducing the amount of material thrown into landfills. Every year we transform millions of tons of scrap metal into a variety of new steel products, promoting sustainable development.

Marquis: Steel production is notoriously energy intensive and conventional production is still heavily dependent on fossil fuels such as coal/coke. I know that Gerdau focuses a lot on recycled material. What are you doing to change the steel supply chain to minimize fossil fuel use? How do you feel about your production of steel from non-recycled raw materials?

Werneck: An example is our symbiotic relationship with the renewable energy sector, an important and growing market for the steel industry. Steel production is an energy intensive process. The presence of more renewable energy sources on the grid makes steel products even cleaner. The environmental footprint of our operations will continue to improve as more renewable energy sources come online. Gerdau recently partnered with a leading solar developer to build one of the largest behind-the-meter (BTM) solar installations in the U.S., adjacent to Gerdau’s steel mill in Midlothian, Texas. The BTM system supplies power directly to the Midlothian steel mill, providing cost and energy efficiency benefits. The Gerdau Solar Project features Gerdau’s industry-leading solar beam poles, offsets the emissions of more than 13,000 average Texas households, and will generate $19 million in tax revenue for the surrounding community over the next 30 years. In Brazil, we signed a partnership agreement with Shell Energy Brazil to develop solar parks in the country. Our Heze Solar Farm, in the southeastern state of Minas Gerais, has an installed capacity of 260 MWp and will meet part of the electricity needs of our steel production facilities in the region from 2024.

Marquis: The recycling industry makes extensive use of scrap collectors, scrap dealers, etc. I’m curious how you source the scrap and ensure that labor in the scrap supply chain is treated fairly.

Werneck: Gerdau maintains a Code of Ethics that reflects the ethical principles we use in our interactions with various stakeholders: suppliers, customers, competitors, shareholders, government officials, communities and the environment. Our business partners are responsible for these standards if they want to do business with Gerdau.

Marquis: As a public company, how do you balance the need for short-term financial performance against the long-term investment required to be environmentally sustainable?

Werneck: I believe there is a connection between financial performance and being a responsible company. We are committed to delivering strong, sustainable results to our shareholders. In addition to saying this is the right thing to do for the communities in which we work and live, many stakeholders – including employees, customers, investors and governments – are calling on manufacturers to improve their environmental performance. This is a key driver behind Gerdau’s pursuit of certification as a B Corp, raising our sustainability standards on the path to becoming a better company.

Marquis: Transforming the steel industry to be environmentally sustainable is more than one company can do. How do you work with industrial partners to jointly solve environmental problems?

Werneck: We have numerous internal initiatives to improve our environmental performance. While our current greenhouse gas emissions are a fraction of the global average for the steel industry, Gerdau has set public targets to reduce our emissions in the near term, with the ambition to make our operations carbon neutral by 2050. improve the environmental performance of the steel supply chain. This includes the initiatives of Gerdau Next, a new business division that diversifies Gerdau’s portfolio to complement our customers’ steel chain and operations, venturing into segments such as renewable energy, contecs, logistics and graphene.

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