Environmental, social, and governance (ESG) aspects have a growing relevance in the corporate world where the objective for sustainability becomes an essential point. The supply chain (SC) is a buyer’s responsibility and accounts for a large part of their ESG footprint. Since ESG performance extends to SC, poor ESG practices in the SC can negatively affect the sustainability of the Anchor Company (AC). Therefore, AC, the buyer, needs to go through a complex, expensive, and time-consuming process to assess their SC. The objective of this work is to develop an ESG assessment model for companies to receive a quantitative score of their footprint by considering both their operations and the SC. The model is verified by considering different scenarios that are designed by testing two different cases with different interactions between two ACs and two SCs with different ESG maturity levels. Results show that the SC has a significant impact on the final ESG score of the AC, highlighting the need for considering the SC to evolve in ESG aspects. In all tested cases, the SC accounted for more than 50% of the final consolidated ESG score. Despite differing ESG maturity levels, two ACs received the same consolidated score due to the influence of their SC scores. Results emphasize that achieving a strong consolidated ESG score is important, and advanced corporate sustainability is not possible without integrating the SC into the strategy. The novel methodology proposed contributes to sustainability, expanding the scope of ESG assessments to include SC and developing a standardized and adaptable model with practical applications.

Environmental, Social, and Governance (ESG) performance is increasingly relevant for corporate sustainability, mainly in high-impact sectors. Building on a previously developed ESG evaluation model, this paper adapts it to the steel sector, considering its specific context and challenges. The model evaluates an Anchor Company (AC), the buyer and focal point, and their Supply Chain (SC), outputting scores for each and a consolidated score, acknowledging the responsibility and potential impact of the SC. This work uses empirical data from a Brazilian steel company, which showed strong ESG maturity, and their suppliers, which showed decent ESG results. However, after integrating the scores, the final ESG score of the AC was significantly influenced by the SC, with 61% of the consolidated result structurally driven by the model's supply chain weighting, reflecting the dominance of scope 3 dynamics in the sector. The findings highlight that to promote effective sustainability, companies must go beyond their boundaries and actively address ESG risks and opportunities across their SC. This study contributes to the sustainability literature by proposing and testing a sector-specific ESG evaluation model in the Brazilian steel industry context, with practical implications for corporate decision-making and potential for adaptation to other regions and sectors.

Steel production accounts for approximately 7% of global GHG emissions. Brazil is the largest steel producer in Latin America, and carbon pricing is rapidly moving from a policy debate to an operational reality, making the financial exposure of Brazilian steelmakers to carbon regulation one of the most pressing industrial sustainability questions in an emerging market context. This study evaluates the financial exposure of the Brazilian steel industry to three carbon pricing scenarios: (i) a domestic cap-and-trade mechanism under Brazil’s Greenhouse Gas Emissions Trading System (SBCE); (ii) Carbon Border Adjustment Mechanisms (CBAMs) applied by key trading partners (EU, a hypothetical USA scenario, and a global scenario); and (iii) supply chain (Scope 3) exposure, relevant under net-zero corporate commitments and the expected expansion of EU-CBAM coverage. Using a scenario-based financial impact approach, with both macro-level (industry) and micro-level (company) analyses, results show that domestic carbon pricing could increase production costs by 7–21%, generating USD 1.6–4.9 billion in additional annual costs (equivalent to 4.3–13.3% of annual industry revenue). International CBAM exposure could reduce Brazilian steel export revenues by USD 570 million to USD 1.7 billion in a global scenario (1.5–4.6% of annual industry revenue). Supply chain emissions represent 68% of the industry’s total carbon pricing exposure, equivalent to USD 1.1–3.3 billion in domestic pricing costs and USD 388 million–1.16 billion in CBAM export revenue reduction. A company-level case study confirms the pattern, with lower Scope 3 intensity yielding a comparatively smaller but still material exposure. These findings offer practical decision support for steel companies and policymakers navigating the transition to a low-carbon economy.