Integrating Sustainability into Business Strategies
At Alcoa, we define sustainability as using our Values to build financial success, environmental excellence, and social responsibility in partnership with all stakeholders.
We integrate sustainability into our core business strategy using a multi-layered structure:
- The Executive Council is accountable for setting annual targets and measuring progress against those targets, as well as longer-term goals;
- The chief sustainability officer is responsible for developing a comprehensive strategy that integrates all of the businesses’ sustainability efforts;
- Business leaders are responsible for the integration of sustainability into their respective business practices; and
- Internal sustainability experts in each region and business around the world implement the strategy and processes. (Additional information can be found in various regional sustainability reports.)
We are committed to regularly reviewing our strategy and performance, and we have been setting goals and publicly reporting our results against them since 1993. Our objective is to be transparent with respect to our sustainability issues and progress and to provide significant information to all of our stakeholders.
In 2009, we developed a new set of long-term goals and objectives to drive progress in our businesses by 2020 and, for some areas, by 2030. We use these strategic sustainability targets to monitor our progress against key focus areas, which include energy efficiency, emissions, and waste.
In late 2014, we initiated a review of our long-term sustainability strategy to identify targets that more fully align with our overall transformation strategy to build our multi-material value-add businesses and create a globally competitive commodity business. While we have always been focused on reducing our impacts—and will continue to make that a priority—we believe there are additional opportunities to better capture the value our lightweight metal products and solutions bring to customers and society through lightweighting and reduced energy consumption in the use phase.
The comparison between our impacts (footprint) and the benefits that we provide to our customers and society (handprints) is what we refer to as our “net-positive” approach. We believe that our current targets do not fully capture those benefits and will continue building out this new net-positive concept throughout 2015 and beyond.
We use sustainability scorecards to measure progress against our near-term sustainability targets and seamlessly integrate sustainability concepts into our business processes. The scorecards allow our businesses to focus on key targets that align with their overall business strategy and facilitate dialogue between business and corporate leadership on progress against those targets.
In addition to the scorecards, each business has developed a roadmap to achieve longer-term (2020) sustainability goals. The Roadmap to 2020 clearly lays out the process steps, business decisions, and technical improvements necessary year-by-year for a business to achieve its longer-term objectives.
Each roadmap identifies the known opportunities for progress and areas that need strategic planning in order to make progress against the 2020 sustainability targets. In many cases, specific actions, investments, and other items were known and articulated in the roadmap. In other cases, ideas or action plans to achieve the ultimate target were unknown.
To ensure the integration of sustainability into our core business strategies, our chief executive officer has championed pay for performance to achieve specific sustainability objectives. During 2014, up to 20% of our variable compensation was tied to achieving significant aspects of our sustainability targets. Across the entire workforce, the targets focused on safety and reductions in carbon dioxide emissions. Our management-level employees had an additional target to improve the diversity of our workforce. See the Compensation section for additional details and 2014 results.
We were recognized in 2014 for our sustainability efforts through inclusion in the Dow Jones Sustainability North America Index for the 13th consecutive time and again in the World Index. This was due to the integration of sustainability into our business strategy and commitment to measurable improvement in our environmental performance. (See other awards.)