Tragedy highlights need for climate-conscious rebuilding efforts, according to company’s shareholder

06/03/2024

André Bier Gerdau Johannpeter — Foto: Silvia Zamboni/Valor

Businessman André Bier Gerdau Johannpeter, continuously monitoring the recovery efforts in Rio Grande do Sul—recently devastated by the most significant flood in its history—is deeply involved in the post-disaster scenario in the birthplace of the steel group founded by his great-great-grandfather. From his apartment in Porto Alegre, the former CEO of Gerdau and now vice-chairman of the board watches as dark clouds gather, signaling yet another heavy rainfall. “We are still in the midst of the catastrophe,” he told Valor last week.

While immediate emergency responses and substantial investments are crucial to restore the basic infrastructure, Mr. Johannpeter is also casting an eye towards the future, considering the broader implications of the devastation. He sees an opportunity for Rio Grande do Sul to become a beacon of sustainable reconstruction and a case study in minimizing climate impacts.

“We need to rethink Rio Grande do Sul. Perhaps the state can serve as a case study for how to rebuild in a way that acknowledges and addresses the realities of climate change,” he suggested. With 50% to 60% of its GDP impacted by the disaster, the state’s immediate needs are dire, but Mr. Johannpeter emphasizes that planning for sustainable rebuilding should begin now, recognizing that it will be a prolonged endeavor.

The businessman is championing an efficient and sustainable approach to reconstruction in response to the increasing frequency of extreme weather events. “If we simply rebuild in the same locations and in the same manner, we are setting ourselves up for future catastrophes,” he warns.

Mr. Johannpeter points to successful international models that could inspire Rio Grande do Sul’s rebuilding efforts. For instance, the Netherlands’ “Room for the River” program was initiated after the 1995 floods of the Rhine and Meuse rivers, which displaced over 200,000 people. “This program does not merely attempt to contain water; instead, it involves sophisticated engineering of dykes, elevation of riverbanks, and channel modifications to allow the river more room to flow safely,” he recalls.

Another example is New Orleans in the United States; following the devastation of Hurricane Katrina in 2005, over $14 billion was invested in enhancing its hurricane and flood defenses. The city’s measures included constructing new dyke systems, installing water pumps, and developing an extensive contingency plan to better manage future disasters.

Despite significant efforts and investments, the aftermath of Hurricane Katrina saw New Orleans’ population decline by 20% as 100,000 residents were forced to leave, having no viable options for resettlement. Mr. Johannpeter expresses a concern that Rio Grande do Sul might face a similar fate. “Without a compelling program that offers residents hope and support to rebuild, we risk a mass exodus,” he cautions.

Mr. Johannpeter also highlights innovative solutions like “sponge cities,” a concept applied in China, the United States, Denmark, and Germany. This approach involves adapting urban environments to absorb, cleanse, and repurpose rainwater. While acknowledging the high costs associated with such technologies, he emphasizes their long-term benefits: “We must envision a grand project that’s sustainable over time, rethinking our approach to reconstruction to ensure it is robust and effective.”

Furthermore, Mr. Johannpeter sees an opportunity to raise global awareness about climate change through Rio Grande do Sul’s reconstruction. He points out that while developed nations are progressing toward decarbonization, similar impactful measures can be implemented elsewhere. He envisions two major goals for the state in the wake of its recent devastation: to become a model for effective and sustainable rebuilding and to enhance global engagement with environmental stewardship, thereby contributing to broader efforts to mitigate climate change.

Internally, various proposals and actions are gaining momentum. Mr. Johannpeter, a prominent member of the Rio Grande do Sul State Federation of Industries (FIERGS), highlights the ongoing campaign to boost local product consumption. Dubbed “Buy RS,” this initiative is designed as an emergency measure to bolster the state’s economy in the wake of recent hardships.

FIERGS has presented over 40 distinct requests for federal support to aid in the state’s recovery, which are already yielding tangible results. According to Agência Brasil, a month following the intervention by the federal government’s task force, an emergency allocation of R$62.5 billion has been directed towards Rio Grande do Sul to assist the flood-impacted populace. Additionally, the government has expedited the distribution of benefits and extended the deadline for tax payments.

Mr. Johannpeter, alongside other leading southern businesspersons and executives such as Daniel Randon, Bruno Zaffari, José Galló, and Gabriela Schwan, is actively involved with Transforma RS, an initiative aimed at mobilizing local and international companies. The organization, which already collaborates with public authorities to enhance management practices, now faces the critical challenge of efficiently managing significant financial inflows and coordinating diverse recovery efforts in the aftermath of the disaster.

“We closely examined what was done during the pandemic to reinvigorate companies. However, there is a heightened challenge now: the economy must be stimulated to generate revenue. It is crucial to infuse new capital into businesses, as this catalyzes both the regional and state economies,” he said.

Gerdau, significantly impacted, saw two of its major plants in Charqueadas and Sapucaia halted by the floods. Though the rains did not directly damage the facilities themselves, operations were suspended to ensure the safety of the workforce, many of whom suffered considerable personal losses due to the flooding.

“There was no damage to the property itself, but we halted operations as a precautionary measure,” explained Paulo Boneff, head of organizational development and social responsibility at Gerdau and general manager of Instituto Gerdau. He noted that approximately 180 families of employees either lost their homes or require extensive repairs before they can return. Gerdau is actively working to support these families in making their homes livable again.

In addition to monitoring the well-being of at least 350 families significantly affected by the tragedy, Gerdau faces the challenge of addressing its employees’ mental health. Mr. Boneff highlighted a dedicated company program that maintains daily contact with affected employees, ensuring that no one is required to return to work until they are ready, including from a psychological standpoint.

Furthermore, Gerdau is actively involved in several other initiatives. In collaboration with Gerando Falcões, a non-profit organization focused on social impact, Gerdau has established a fund to aid housing efforts, kick-started with an initial company donation of R$5 million. This fund, open to contributions from other corporations, aims to finance the construction of temporary or permanent residences for families who have lost their homes. Additionally, the steelmaker is contributing to the rebuilding of small bridges in the hilly areas of Rio Grande do Sul, which is critical for the region’s logistics and accessibility.

The controlling family of Gerdau has actively participated in various efforts to aid the reconstruction of the state. In collaboration with Din4mo Lab, a consultancy specializing in social impact businesses, they established the Regenera RS emergency philanthropic fund. Initiated with a substantial contribution of R$30 million from Instituto Helda Gerdau and the steel company itself, the fund aims to amass a total of R$100 million. Managed by Din4mo, the funds will support projects across education, housing, urban solutions, and business development.

“It is a collective endeavor involving both the public and private sectors and drawing support from within and beyond Brazil. Every bit of help counts. The emotional impact is profound, and while the full scope of the challenge is still unfolding, it is clear that it will be substantial,” expressed Mr. Johannpeter.

*Por Stella Fontes, Helena Benfica — São Paulo

Source: Valor International