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Alcoa and Environmental Sustainability
An Outstanding Opportunity
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Worldwide Operating Locations
61%61% 23%23%
10%10%
6%6%
•• 131,000 Alcoans131,000 Alcoans•• 350 Operating Locations350 Operating Locations•• 43 Countries43 Countries•• $23.5 Billion in Revenue$23.5 Billion in Revenue
% of Revenue
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What is Alcoa today?
Who are we?
We are a global premium manufacturing company with a diversified portfolio in base metals & mining, engineered customer solutions, and packaging
Our businesses fall in four segments
• Upstream• Aluminum conversion• Engineered products• Packaging
Who are our customers?
Our customers are generally large, global corporations that demand the very best in quality, service and price.
The top 100 customers generate 50% of total revenues and 60% of profits
Our principal markets are•Aerospace•Automotive•Commercial Transportation•Packaging
What are our competencies?
• Deploying our Value & Business System globally
• Investing for the long-term (bauxite, energy)
• Operating large, complex assets in an integrated system on a global scale
• Developing aluminum product & process technology with deep understanding of end-use applications
Our Vision
Alcoa aspires to be the best company in the world
Our Goals
Live our Values Top-Quintile ROC Strong Balance Sheet
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Corporate Vision↘EHS Value
↘EHS Policy↘EHS Principles
↘2020 Strategy↘Regulatory Compliance↘Standards & Procedures/Documentation↘Protocols
↘Self-Assessment (ASAT)↘Audits/Verification
↘Balanced Scorecard Goals↘Measure Results
↘Education & Training↘Benchmark – inside and out
↘Real-time incident reporting↘Incident Investigation
↘Communication↘Recognition/Consequences
↘Organize for Results
Environmental management within Alcoa
At Alcoa, our vision is to be the best company in the world--in the eyes of our customers, suppliers,
shareholders, communities and people.
2020 EHS Strategy:- Zero Emissions- Zero Wastes- Zero Discharge- Zero Incidents- Zero Non-Compliance- Support Growth- Sustainability-no legacies- Enhance the Reputation- Lead the Way
External Verification:The WEC AwardThe Ron Brown AwardThe Dow Jones Sustainability IndexThe Domini IndexInnovest – Green Company DesignationNamed one of three most sustainable companies in the world at Davos in 2005Corporate Certification to ISO14001 in 2003
Bob JamesDirector Health
Haig SakoianDirector
EHS Audit
Dr. Pat AtkinsDirector
EnvironmentalStewardship
Dr. Mark Cullen
Med. DirectorYale
University
Rick WilliamsDirector Safety
Bob SlackManager
Corporate Safety
Technical
Wade HughesDirector
Communication
Environment Health Safety AuditCommunication
EHS Compliance
Tom Meek
EHS Legal
Jeff Lettrich/Kevin Carter
EHS Services & Remediation
Rob Bear
Business Unit EHS Professionals
EHS ITSystems
Diane Klocko
Bill O’RourkeVice President EHS and Audit
EHS TechnologyDr. John Smith
Global EHS Lead Team
K. Martchek
Sustainability
Global EHS
Audit Staff
Alcoa Worldwide EHS Organization
Dr. J. Wesdock
Corporate Support: Jorge Fontanez; Shamsa Khan; Sandy Stephens
SustainabilityAnita Roper
North AmericaRob Bear
EuropeJuerg Furrer
AsiaMalcolm Wright
Latin AmericaMauricio Born
AustraliaDavid Willet
External AdvisoryBoards
OEHAC
ETAB
Yale University
Awards Judges
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Social Responsibility
Environmental Excellence
1888 1988 202019671952
Living our Values
20041939 1980 1997
Good Governance
Dividends to shareholders Vision and
Values
Alcoa Foundation
Fortune – Best Metals Co.
(over 10 yrs)Bates - 70 Year Mining
PlanEnv. Policy
Brazil1st Greenfield
Plant with sustainability
in mind
SurinameCommunity
Medical ClinicSafety data
systems
Sustainability ReportingABS
GreeningAust. Partnership
Human RightsPosition
1st and 2nd Cost challenges
2020 Framework
UN Global 500 Award
Action and BravoWEC Gold Medal
2020 Framework
Community Framework (2001)
EH&S Training
Long-termbusiness success
Portland Smelter in the Park
Social Responsibility
Alcoa Sustainability Model
Environmental Excellence
Economic Performance
Prin
ciples
Values
• Integrity
• Environment Health & Safety
• Customer
• Excellence
• People
• Profitability
• Accountability
ABSPeople –
linchpin the system
Products –make to use
Processes –eliminate waste
Stakeholders
Employees
Communities
Shareholders
Customers
Suppliers
Partners
…
Governance
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Significant Environmental Issues
Regulatory expectations
Customer expectations
Expectations of the Public, including the communities where we operate
Expectations of investors and other stakeholders
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A Few Examples
Global Climate Change
Energy constraints
The growing water crisis
The growing concerns about bio-accumulative materials
Materials Use and Recycling
Land Use concerns
Communication and reporting issues (internal and external)
Sustainability
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Sustainable Development is the basis for the Sustainable Development is the basis for the Alcoa Environmental Strategy . . .Alcoa Environmental Strategy . . .
Respect for our neighbors and respect for the generations that will follow
Elimination of All Waste
Products Designed for the Environment
Integration of Environmentwith Manufacturing
Incident-Free Workplace
Environment as a Core Value
Reputation
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Elimination of WastesElimination of Wastes
VOCs
50% REDUCTION
TODAY 10,910 tons
2008 5,480 tons
NOx
30% REDUCTION
TODAY 56,300 tons
2007 47,770 tons
MERCURY
80% REDUCTION
TODAY 2,990 kgs
2008 620 kgs
SO2
60% REDUCTION
TODAY 287,000 tons
2010 108,700 tons
75% with inert anodes
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AlcoaAlcoa’’s Greenhouse Gas Reduction Targetss Greenhouse Gas Reduction Targets
25% REDUCTION
50% REDUCTIONWith inert
anode
1990 48.056 M tons
TODAY 37.222 M tons
2010 (projected) 35.950 M tons
2010 (projected) 23.191 M tons
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Plans to reduce wastes to landfills by 50% by 2007 Plans to reduce wastes to landfills by 50% by 2007 . . . . . . on the way to elimination of all land filled wastes by 2015on the way to elimination of all land filled wastes by 2015
Reduction of process water use by 60% by 2008 Reduction of process water use by 60% by 2008 . . .. . . on the way to achieving zero process water discharge on the way to achieving zero process water discharge
and and ““near zeronear zero”” storm water discharge by 2015storm water discharge by 2015
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Products Designed for the EnvironmentProducts Designed for the Environment
-- Increased commitments for recyclingIncreased commitments for recycling. . . aluminum, plastics, other materials. . . aluminum, plastics, other materials
-- Encourage customer and supplier interactions on Encourage customer and supplier interactions on Environmental issues and product design/recyclingEnvironmental issues and product design/recycling
-- Follow AFL an Alcoa business that is initiating an Follow AFL an Alcoa business that is initiating an Environmental Product Stewardship programEnvironmental Product Stewardship program
-- Make increased use of Life Cycle Analysis, for Alcoa and Make increased use of Life Cycle Analysis, for Alcoa and our customers.our customers.
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ReputationReputation
All BUs will use AlcoaAll BUs will use Alcoa’’s New Community Framework s New Community Framework for improved management of Environmental issuesfor improved management of Environmental issues
We are improving working relationships with regulatorsWe are improving working relationships with regulatorsand partnerships with nonand partnerships with non--government organizationsgovernment organizations
By 2004, BU and Corporate Sustainability ReportsBy 2004, BU and Corporate Sustainability Reportswill use the Global Reporting Initiative Guidelineswill use the Global Reporting Initiative Guidelines
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By 2006 Alcoa will achieve annual energyBy 2006 Alcoa will achieve annual energy
and Environmental cost reductions ofand Environmental cost reductions of
$100 Million$100 Million
…… and much more is possibleand much more is possible
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Alcoa Businesses Are Doing It!Alcoa Businesses Are Doing It!
Primary MetalsPrimary Metals90% sulfur dioxide (SO90% sulfur dioxide (SO22) reduction) reduction
AFLAFLinitiating Product Stewardship initiating Product Stewardship
programsprogramsNorth American ExtrusionsNorth American Extrusionsinitiating Energy Alert programsinitiating Energy Alert programs
Alcoa EuropeAlcoa Europe95% volatile organic 95% volatile organic compound reductioncompound reductionAlcoa BrazilAlcoa Brazil
100% certification to100% certification toISO 14001ISO 14001
AWAAWA10% reduction in Greenhouse10% reduction in Greenhouse
Gas emissions per tonGas emissions per tonnene
0
20
40
60
80
100
120
2000 2001 2002 2003 2004 2008
K L
(mill
ions
)
Baseline Target Actual
0.0
0.2
0.4
0.6
0.8
1.0
2000 2001 2002 2003 2004 2007
Met
ric T
onne
s (m
illio
ns)
Baseline Target Actual
WATER USEGoal: 60% reduction in process water use, and
discharge by 2008.
LANDFILLED WASTEGoal: 50% reduction in landfill waste by
2007.
Some Current Environmental GoalsSome Current Environmental Goals
% Reduction from 2000 Baseline:
2001 5.9%2002 4.5%2003 11.0%2004 15.4%
% Reduction from 2000 Baseline:
2001 37.0%2002 38.5%2003 44.7%2004 57.0%
Progress towards 2020 Vision % Reduction from Baseline
-57.0%
-15.4%
-38.0%
-5.8%
-21.9%
-4.4%
0
10
20
30
40
50
60
70
80Water Use
Landfill Waste
Mercury
NOX
SO2
VOC
Target
% of Target
Blue represents targets for 2008-2010 for the parameters
Green represents the progress through 2004
2020 Environmental VisionCURRENT TARGETSFrom base year 2000:
• 60% reduction S02 by 2010 • 50% reduction volatile organic compounds by 2008 • 30% reduction nitrogen oxides by 2007 • 80% reduction mercury emissions by 2008 • 50% reduction landfill waste by 2007 • 60% reduction in process water use, and discharge, by 2008
From base year 1990: • 25% reduction in greenhouse gas emissions by 2010. • (50% Assuming success with inert anode technology)
Implement effective environmental management systems, such as ISO 14001, at all locations by 2005Zero environmental non-compliance incidents by 2005$100 million annual environmental and energy cost savings by 2006through elimination of wastes and design for sustainabilityEnvironmental targets and community relationship objectives incorporated into all Alcoa businesses' annual plans.
–LONG TERM GOALS
–90% reduction by 2015
–95% reduction by 2015
–85% reduction by 2015
–95% reduction by 2010
–100% reduction by 2015
–Zero water discharge by 2015, including storm water
Environmental CHALLENGEFor Alcoa on the road to Sustainability
60% reduction by 2010
60% reduction bt 2010
50% reduction by 2010
90% reduction by 2010
75% reduction by 2010
70% reduction by 2010
10% less material use by 2010
Utilize 25% recycled aluminum in fabricated products by 2010
Reduce energy intensity by 10%by 2010
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What Else Is Needed?What Else Is Needed?
Engage all Alcoa employees and use theirEngage all Alcoa employees and use theircreativity and innovationcreativity and innovation
Abandon the Abandon the ““businessbusiness--asas--usualusual”” approach . . .approach . . .endend--ofof--pipe solutions donpipe solutions don’’t solve problems or save moneyt solve problems or save money
---- in fact, they do the oppositein fact, they do the opposite
Use the full power of the Use the full power of the Alcoa Business SystemAlcoa Business System
New and creative interaction with communities,New and creative interaction with communities,regulators and nonregulators and non--government organizationsgovernment organizations
Alcoa must be the best company in each communitybefore Alcoa can be the best company in the world.
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What can be learned from Alcoa?
We set difficult goals…..
and then we meet them…..
It does not happen easily…it requires training, communication, resources, commitment, creativity and dedication.
…..and the engagement of 131,000 people
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My Policy Recommendations
Aim for transparency in all policy options
Articulate goals very clearly
Provide options for achieving the goals
Benchmark the “best” and most effective
Be very selective in what you want to accomplish (the goals you select and the milestones that you use to monitor progress will drive behaviors and shape attitudes, support and acceptance)
Put metrics in place that are understood by all stakeholders
Monitor and report openly and frequently
Engage the entire community, make as many as possible feel that they are a part of the program
Celebrate all progress
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