Gerdau: Integrating Purpose and ESG Across the Value Chain
Making decisions that benefit all people, communities and the planet is one of the core principles of the B Corp movement. To rethink the role of business, all B Corps are required to change their legal articles to embed purpose into their organization and ensure they consider their impact on all stakeholders – including, but not limited to shareholders. But what does this mean in practice, especially for large multinationals? As part of a collective call to action for all business leaders, investors and policy-makers to embrace this way of doing business, B Lab sat down with the B Movement Builders to understand what adopting these governance frameworks means to them.
Why is it important for Gerdau to adopt this commitment to Stakeholder Governance?
People have always been the basis and the reason for everything we have built at Gerdau. We believe that putting people at the center of everything we do is what will keep us relevant over time. And when we talk about people, we are talking about all of them: employees, customers, suppliers, communities, shareholders. People are the essence of our culture and how we operate in the world.
Generating value for all these stakeholders is one of our principles. Adopting stakeholder governance is a way of addressing today's social and environmental challenges and contributing to a more inclusive economy. We believe that our long-term survival depends on this active management and on balancing the interests of all the groups with which the company interacts.
What does Stakeholder Governance look like in practice for Gerdau?
Generating shared value is the basis of stakeholder management and, in this sense, Gerdau has several initiatives that seek the collaboration and well-being of its stakeholders. Many of these were driven by our commitment to the B Corporation Movement.
The actions we take with our supply chain are practical examples of this.
The Inspire Gerdau program aims to mobilize suppliers to implement actions that promote diversity and inclusion in their companies. To this end, we provide training and support them in improving their diversity management.
The promotion and engagement of suppliers to act on ESG issues has gone beyond sharing policies – it is now documented as a social clause in supply and energy contracts. As a result, a percentage of the contract value must be earmarked for social and environmental projects.
The technical training provided to people in the communities where we operate is a way of helping them to have more opportunities. Even if Gerdau or our suppliers are not able to absorb all of these professionals, these people will be qualified for the job market. This has a positive impact on the ecosystem as a whole: communities are strengthened, they have greater purchasing power, and it encourages the search for continuous learning.
As a large company with an international footprint, how will Gerdau ensure the Stakeholder Governance commitment is upheld by all levels of the organization across the multiple countries where it operates?
We have established robust governance to ensure that our decision-making process takes into account not only financial variables, but also social, environmental and governance variables.
The sustainability agenda is dealt with by the company's highest governance body: the Board of Directors. In 2019, this agenda was integrated into the Strategy Committee, which was renamed the Strategy and Sustainability Committee (CES). The CES is one of the advisory committees of the Board of Directors and this change was one of the ways to make it clear that sustainability is strategic for Gerdau and that it must be present in business discussions about Gerdau's future.
In addition to the corporate structure, our business divisions have begun to establish local governance for the issue. At Gerdau, sustainability is dealt with across the board in all our processes and operations. For this reason, we don't have a single area that centralizes and is responsible for the issue. We work in squads or multidisciplinary committees, which guarantee an integrated view of ESG aspects.