Key ChallengeCorruption
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The program is designed, implemented, and enforced so that it will be effective in preventing and detecting conduct not conducive to our values. As a global manufacturing company doing business in many countries, we have long recognized the importance of adhering to a common set of ethics policies and values and using an effective global program to clearly communicate and enforce these standards throughout the company.
Our Compliance Advisory Council—made up of the chief executive officer, chief financial officer, and chief compliance officer—meets with the director of global compliance, director of ethics and compliance, and others on a regular basis to review program effectiveness, assess strategic direction, and provide tactical support.
Guide to Business Conduct
Alcoa’s ethics-related policies are clearly explained in our Guide to Business Conduct, developed in partnership with our business and resource units. The guide was adopted by our Executive Committee to promote ethical conduct consistent with our values, create awareness for compliance with applicable laws, and serve as a vehicle for business decision-making. The standards detailed in the guide apply to members of Alcoa’s board of directors and all company employees, including executive management. We have updated the guide as we adopt new policies or where new laws are enacted that focus on corporate ethical requirements.
Available in 23 languages, the guide defines our commitment to doing business with integrity and clarifies the responsibilities that the company and its employees have to each other, to our worldwide partners, and to the communities in which we operate. It also outlines the consequences of failure to comply with applicable laws or Alcoa’s policies and procedures, and it requires prompt reporting of suspected wrongdoing.
View key points of the guide.
Stakeholder-Specific Guides
To keep our ethics and compliance efforts effective, we produced two condensed versions of the guide to address the needs of focused groups of stakeholders. The Guide to Business Conduct in a Manufacturing Environment, made available to all Alcoa businesses, contains a subset of items discussed in the corporate guide but with a focus on business conduct issues most likely to exist in a production or manufacturing environment.
We also publish a guide for key customers and suppliers. As with the manufacturing guide, this document is a subset of our main guide but is intended for customers and suppliers who may benefit from knowing how Alcoa employees and agents are expected to conduct themselves in a business relationship.
Leader’s Guide
Alcoa’s managers are required to create a work environment that encourages ethical behavior and enables employees to raise issues without fear of reprisal. In 2008, we published a Leaders’ Guide for all global employees who are in a position to supervise others in their respective organizations.
While approximately 56,000 copies of the guide were distributed in various languages to all global leaders, the real focus was directed toward mid-level managers, supervisors, superintendents, and employee team leaders. The guide provides meaningful guidance to our mid-level managers when they are faced with ethics issues raised by their employees. We believe line management must “own” ethics and compliance in order for it to be effective.
This guide provides insights on how to create an environment that fosters the raising of issues and concerns and on what managers should do when such information comes to light. It emphasizes and reinforces our non-retaliation policy, and it generally suggests ideas to build a culture that encourages employees to raise issues when they see conduct that does not support our policies and/or the law.
Ethics and Compliance Training
To further support our leaders initiative, we developed and began deploying in 2008 specifically focused training for our global supervisors, superintendents, and mid-level managers. The purpose of this training is to build awareness and skills in leaders who supervise others regarding how they affect the ethical environment of their workplace through their actions and decisions. The training video contains six scenarios that provide supervisors and managers with consistent language and expectations regarding common leadership situations, as well as a model on how to give and receive respectful feedback and advice.
All Alcoa employees are required to participate in a training session at their location that explains the business conduct standards and their applicability to the employee’s job responsibilities. This training and the Guide to Business Conduct are part of the on-boarding process for all new employees and contractors.
We have also deployed mandatory, job-specific, web-based ethics and compliance training for corporate officers, business unit leaders, and employees who negotiate with customers and suppliers, can contractually commit the company, or have access to confidential information. Shop floor and clerical employees also undergo job-specific training.
Ongoing Communications
We distribute quarterly ethics and compliance communication materials, which deal with business ethics and proper conduct, to all locations to maintain an awareness of current issues, familiarize employees with business conduct expectations and promote understanding of our business values and philosophy. Many of the subjects in these materials are based on actual issues encountered and investigated by Alcoa.
Ethics and Compliance Line
Our global Ethics and Compliance Line provides employees and other concerned parties an anonymous channel for expressing concerns and raising issues about workplace activities and business practices. Employees are also encouraged to use the line to obtain an interpretation of laws or regulations, seek clarification of Alcoa policies or procedures, or simply ask for advice on proper actions.
The compliance line is available to Alcoa employees worldwide, with the local toll-free compliance lines answered in the caller’s native language. We also offer an ethics and compliance e-mail address (anonymous, if desired) and a postal mail address for submission of written inquiries. Every concern or request for advice is addressed and responded to without reprisal, and we currently have a target response date of 18 calendar days contingent upon the seriousness and number of issues raised.
When an employee calls or sends written notice, the issue is reviewed immediately. Those that are felt to pose an immediate threat to the personal safety of employees, Alcoa property, or the community are sent to pre-determined emergency contacts, who begin an immediate investigation and institute corrective action when necessary. Non-emergency issues are sent to a regional liaison for review and forwarding to the appropriate location or business unit for investigation.
Once an issue is resolved, a written response on the investigation and any corrective actions is submitted to the Ethics and Compliance Line vendor. The caller, who previously was given an identification number, can then call back on the line in 18 days to obtain the relevant information from the investigative results.
Exit Interview
We have developed and implemented an exit interview process that incorporates several ethics and compliance-related questions. The impetus behind this initiative is the belief that the ethical climate of Alcoa, as well as any specific code of conduct infractions, can be gauged to some degree through the exit interview process.
We believe some employees have a hard time talking about compliance violations unless they are specifically asked. This exit interview process, conducted by an unbiased third-party vendor, provides exiting employees an opportunity to disclose potentially unethical or non-compliant practices, giving us a significant opportunity to investigate these issues and, if validated, allowing us to take corrective action.
Business Conduct and Conflict of Interest Survey Certification
Every year, we ask selected employees to reaffirm their commitment to Alcoa’s values and ethics-related policies through the Business Conduct and Conflict of Interest Survey Certification (BCSC), which is a confidential reporting mechanism.
In 2008, there were approximately 11,500 employees, agents, and contractors identified by Alcoa business unit management to certify compliance with our business conduct, insider trading, anti-corruption and conflict of interest compliance policies. These selected personnel have responsibilities that could expose the company to contractual risk as a result of their position responsibilities. They include all individuals who interact with vendors, customers, competitors, sensitive information, the public, and various government agencies.
Any issues or requests for clarification raised in these surveys are completely reviewed. Results are also reviewed by the ethics and compliance officer and the general counsel where required or requested. In 2008, the results of the business conduct survey/certification process were again recognized by Alcoa for their high degree of internal control and sustainable processes.
The following are some points of significance regarding the 2008 BCSC process:
- 11,500 surveys were received and accounted for in record time (December 7, 2008) due to increased process and server reliability and recognition of the BCSC process by survey participants;
- 98.0% of survey certifications were completed online due to increased server and database reliability;
- Employees in 18 countries were directed to their nation’s data privacy statements in order to grant informed consent prior to submitting their survey responses. This change was made to ensure compliance with European, Australian, and Canadian data privacy laws;
- The process systematically tracked 11,548 employees in 45 countries for 100% accountability of certifications issued; and
- 100% of all affirmative responses were followed up with the employees and their supervisors where it was deemed appropriate.
Major Investigations
Our Ethics and Compliance (E&C) Department continues to manage and facilitate major internal investigations related to allegations of misconduct involving our employees and business partners. The investigation strategy focuses on a team approach normally involving the ethics and compliance, legal, human resources, finance and internal audit departments.
In a continued effort to drive improvement in its approach to investigations, the E&C Department enhanced its investigation processes by attending training sponsored by the Association of Certified Fraud Examiners (ACFE). Individuals from the department remain active in the ACFE local area chapter to keep abreast of current fraud trends and issues that could impact Alcoa.
Ongoing training, both web-based and real-time, communications, the annual survey, the Guide to Business Conduct, and an overall values-based culture are factors which aid in minimizing situations of behavior inconsistent with our values.
Effectiveness Metrics
Another significant step in the maturation of our ethics and compliance process was the development of effectiveness metrics that help provide an objective assessment of the impact of our ethics and compliance program on our organization. Historically, we have maintained activity metrics. These metrics only measure the degree to which we have deployed our ethics and compliance tools and the extent to which they are utilized. What they do not measure, and what is even more important, is the change that is brought about within Alcoa as a result of the implementation of these processes.
The Ethics & Compliance Line program illustrates the difference between the two types of measures. While we measure activity (i.e., call volumes, types of calls, regional activity, accuracy of the service provided, etc.), these metrics alone do not indicate the value the line is providing to both Alcoa and our employees. To gauge effectiveness, calls into the line are analyzed on multiple effectiveness metrics, including the percentage of calls that are anonymous and the ratio of inquiries versus allegations of wrongdoing.
Geographic Breakout of Ethics and Compliance Line Calls
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Ethics and Compliance Line Closed-Call Reports
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We continue to monitor activity measures in our web-based ethics and compliance training (e.g., the number of courses deployed, course completion rates, etc.). Cumulative results through 2008 show that a total of more than 450,000 courses have been issued to an average of 13,000 employees per year. We also have achieved a cumulative 92.7% completion rate for the courses deployed.
To gauge the effectiveness of the training, we have implemented a survey to determine employee perception of the value of this training, i.e., how effectively is the training creating an awareness of Alcoa’s business conduct policies and influencing employee behavior. We issue a quarterly survey to 200 random participants of the 13,000 employees enrolled in the training.
The following data provides the latest full-year effectiveness rates:
- 92.5% of employees surveyed (on average) each quarter respond to the survey;
- 96.7% stated they were more aware of business conduct issues;
- 92.8% responded positively that courses were worth the investment of their time; and
- 95.0% felt the courses would change their view of their responsibilities as an Alcoa employee.
Business Ethics and Corporate Responsibility
A symbiotic relationship between business ethics and corporate responsibility within Alcoa is rooted in our values-driven approach to business and indicative of how companies today must look beyond financial performance to meet the needs of an increasingly diverse and sophisticated stakeholder base.
As a values-driven, ethical company, we endorse and have implemented sustainability principles. Our application of these sustainability concepts is predicated on our strong foundation of ethical principles. The two are intrinsically intertwined, and we have clear, unequivocal approaches to both that are integrated into our culture and monitored continuously to fulfill our financial, environmental, and social responsibilities.
In Alcoa, business ethics is about the application of ethical values and how they underpin the way our employees conduct everyday business.
Our focus on corporate responsibility incorporates those values within our core business strategies and establishes a set of commitments to our stakeholders. Corporate responsibility helps define what an organization is responsible for and to whom it is responsible (and why)—underpinned by the company’s ethical values and policies and programs that make the values operational. Business ethics and corporate responsibility can be characterized in various ways, but most often the primary goal of business ethics is to prevent harm, while the objective of corporate responsibility initiatives is to do good.
The interrelationship of business ethics and corporate responsibility plays an increasingly important role in business today. Companies can no longer operate without considering the impact they have on a global society that expects certain standards of behavior from them. As the public becomes more demanding, these standards could become an important factor in determining from whom consumers will purchase products or services. The Institute of Business Ethics has labeled the approval of society to allow a company to continue doing business “a license to operate.” In other words, society increasingly expects companies to treat their employees fairly, tell their customers the truth, and address their environmental impacts.
At Alcoa, the strong relationship between business ethics and corporate responsibility initiatives helps us define our approach to what we are responsible for, to whom we are responsible and why, and what initiatives and actions will be necessary to achieve our longer-term goals.
2008 Awards and Recognition
Covalence—European-based organization that tracks the ethical reputation of multinationals by sourcing information from companies, the media, and civil society. Alcoa has placed in the top three overall for several years and had the best ethical quote score in the metals and mining sector.
Ethisphere—Alcoa again has been named one of the World’s Most Ethical Companies by Ethisphere, a think-tank dedicated to the research and promotion of profitable best practices in global governance, business ethics, compliance, and corporate responsibility. Alcoa has achieved Ethics Certified status from this organization.
Ethical Leadership—Perry Minnis, Alcoa’s former director of ethics and compliance, received the Excellence in Leadership Award from the University of Pittsburgh’s David Berg Center for Ethics and Leadership for his commitment to ethical practices. He also earned outstanding ethics management recognition from the Mendoza Graduate School of Notre Dame University.
Carta Capital—Alcoa earned second place in Brazil’s Most Admired Companies award in the metallurgy and steelmaking sector. Ethics was the key indicator consideration in determining the recipients.
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Global Ethics and Compliance Line Numbers and Documents
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