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Sustainability Approach
At Alcoa, sustainability is defined as using our values to build financial success, environmental excellence, and social responsibility through partnerships in order to deliver net long-term benefits to our shareowners, employees, customers, suppliers, and the communities in which we operate.
Our commitment to sustainability has a long history and is evident every day—from the way we live our values to our strategic framework for sustainability supported by clear targets for measuring progress toward achievement of our vision for 2020.
While we have developed a corporate approach to sustainability, implementation occurs at the local level. In 2006, we made great progress in integrating sustainability into our business units and operating locations. For example, many of our business units are using workshops and other methods to engage customers, management, employees, communities, and other stakeholders in sustainability initiatives, leading to strategies and action plans.
Within Alcoa's Global Foil business, the leadership team is developing a global sustainability roadmap to differentiate its products through the three pillars of sustainability and leverage those benefits upstream to customers.
Compared to alternative materials, foil leads to improved packaging solutions and weight reduction. Foil is also a fully recyclable material and provides exceptional barrier properties, such as those for pharmaceutical and aseptic requirements. Foil-based packaging solutions provide a longer shelf life—in distribution, in the stores, and in the home—thereby reducing food spoilage. When used in beverage cartons for products like milk and juices, foil eliminates the need for refrigeration, leading to energy savings.
This sustainability effort involves seeking input from key stakeholders in the value chain, such as consumers, and industry thought leaders to identify their sustainability requirements and how Alcoa's products can help achieve them.
In Europe, we formed a sustainability network and appointed a sustainability coordinator to oversee and drive our efforts. In Canada, a provincial advisory group comprising eight stakeholders representing key perspectives and five Alcoa representatives was formed in 2006 to advise Primary Metals Canada on how best to integrate sustainability to meet the expectations of society. Key action items resulting from the first workshop on community support include developing a policy on community support that also integrates environmental aspects, formalizing a sustainability leadership approach, producing or obtaining a socio-economic needs evaluation for each community, and reviewing the results of an Alcoa perception survey with stakeholders.
Within the United States, a number of locations have held sustainability workshops with both the plant leaders and their community boards to discuss mechanisms for stronger and more effective engagement. Our Iceland initiative is serving as a model for this engagement and at our other plants worldwide.
Additional information on how we are implementing sustainability at the local level can be found on the following country and region pages:
Australia,
Brazil,
Canada,
China,
Europe,
Guinea,
Jamaica, and
Suriname.
Other key sustainability initiatives in 2006 include the following:
- We established a multi-disciplinary team to undertake an analysis of major global trends and their potential effects on our current markets and future opportunities. Part of this process was the consideration of sustainability principles.
- Alcoa Foundation continued its Conservation & Sustainability Fellowship Program, with dozens of fellows around the world currently conducting research on the many serious and challenging sustainability issues facing the world today. The program's first worldwide conference brought together the fellows, other program participants, and representatives from business, government, and non-governmental organizations.
- We conducted a global water summit with internal and external experts in water conservation, and we will complete a risk profile for our significant water use plants to allow us to prioritize future projects in regions where action is most needed.
We were recognized for these and other efforts through inclusion in the Dow Jones Sustainability Index for the fifth time and being named one of the most sustainable companies in the world at the World Economic Forum in Davos, Switzerland, for the second (2006) and third (2007) years in a row. (See other awards.)
Issues and Challenges
Our efforts at addressing key sustainability issues and challenges continued in 2006.
Climate Change
We maintained our 25% reduction goal in greenhouse gases from 1990 levels despite the growth we experienced. In recognition of our performance in reducing these emissions, CERES—the largest coalition of investors, environmental and public interest organizations in North America—ranked Alcoa second among U.S. companies in its Report on Corporate Governance and Climate Change. Additional information is available in the Environment section.
Engagement with Stakeholders
As mentioned earlier, we have continued to develop our internal and external stakeholder engagement processes with the Iceland Sustainability Initiative serving as a model in our training programs and with our community advisory boards throughout the world. The emphasis is on seeking earlier input from our stakeholders in the communities where we operate—not just for our growth projects, but also for existing plant upgrades, expansions, and ongoing activities. Additional examples of our global engagement can be found in the Community Consultation section.
Internally, the Public Issues Committee of our board discusses key sustainability issues throughout the year. In 2006, the committee reviewed public issues associated with community health, diversity in employment, corporate giving, and governmental relations. The committee also visited the Juruti mine project in Brazil to review public issues associated with the mine development.
Measurement Systems
We continued our strong history of using metrics as a means to drive change within the company, using the 2020 Strategic Framework for Sustainability to help guide our businesses and measure our progress toward our vision for 2020.
Energy Strategy
A full discussion of our strategy can be found in the Energy section. Highlights for 2006 include implementing the development of an innovative slotted anode that was awarded the State of Indiana's Governor Award for Environmental Excellence in the energy efficiency category; commissioning the first of four gas-fired cogeneration power plants that use waste heat at the Pinjarra alumina refinery in Western Australia; and initiating solar installations.
Products
We continued our efforts to increase the use of aluminum through innovative product solutions for our customers. For example, we developed four products for the commercial transportation industry—fuel tank, landing gear, fifth wheel, aluminum composite panel—that provide customers with products that reduce weight and maintenance and operating costs while increasing payloads and fuel economy. We also introduced a new hurricane-resistant architectural panel system that withstands hurricane force winds and wind-borne debris.
Our innovations extended beyond aluminum to include plastic sheet using starch-based, biodegradable resins for thermoforming and other markets. Additional information can be found in the Products & Services section.
Biodiversity
A full discussion on our biodiversity approach and initiatives can be found in the Biodiversity section.
Technology
We continued to work with our suppliers, customers, and other stakeholders to use technology to improve our sites, materials, processes, and products within sustainability principles.
For example, we are currently evaluating advanced prototypes of two technologies to reduce sulfur dioxide (SO2) emissions from smelters. The first of these concentrates SO2, reducing the volume of smelter gas to be treated. The second technology is a novel, wet-scrubbing approach that has, at lab scale, demonstrated SO2; removal at greater than 90% over conventional methods.
In early 2007, we signed a memorandum of understanding with India's Council of Scientific & Industrial Research to partner in collaborative research projects that address critical global issues, such as energy efficiency, alternative and renewable energy sources, environmental technologies, and multi-material engineered solutions. We also established an Innovation Center of Excellence with leading universities in Russia to work on research and development projects focused on innovative mining, refining, and smelting technologies.
At the heart of our technology efforts is the Alcoa Technical Center, which is the world's largest metals research lab. ATC is part of a closely linked network of Alcoa labs located around the world that collaborate among themselves but also with our businesses on product- and process-related issues that address both current needs and long-term opportunities.
Facility End-of-Life Activities
Although it can be less costly to "fence it and forget it" when dealing with closed facilities, we actively work to develop an end-of-life strategy that benefits the community and positions the facility to be reused or redeveloped.
In 2006, we evaluated a number of closed facilities. Some were able to be reused as industrial facilities and were sold. For others, we decided that their "highest and best use" was not compatible with the existing facility. In Monchengladbach, Germany, for example, we completed the demolition of our former manufacturing facilities and have the property available for reuse.
We also completed the US$20 million decommissioning program to prepare our former smelter facility in Troutdale, Oregon (USA), for redevelopment by remediating the facility to an industrial use standard. The sale of the facility to the Port of Portland is scheduled for the first half of 2007. In Longview, Washington (USA), we have worked with our lessee to reposition the location as a major bulk material import/export terminal. The lessee is now transshipping cement, petroleum coke, and coal through the facility and employing more than 50 people full time. We expect this facility to continue to grow and become a major component of the local economy and tax base.
Also in 2006, we again were the major sponsor for the Phoenix Awards, which are given annually to the most successful brownfield redevelopment projects across the U.S.
We anticipate 2007 will be another active year for end-of-life activities, as we develop plans for a number of significant locations in the U.S. and Western Europe. We are also working to incorporate lessons learned from our decommissioning activities into the design of new facilities so they can be more easily reused or demolished at the end of their lives.
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