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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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