“Metrics of Corporate Responsibility”

Ken MartchekAlcoa Inc.

Sustainable Manufacturing, Production, and Competitiveness Workshop

Copenhagen21 June 2007

2

Overview of Presentation

Global “Sector’ MetricsEncouraging More Sustainable ProductionLinkage of Metrics,Targets and Actions

Sector (ex. Aluminium)

Corporate Members (ex. Alcoa)

Member Individual Facilities (ex. Alcoa Fjarðaál )

3

Aluminium Sector – Global Operationsbauxite mines

alumina refineriesaluminium smelters

4

Primary Aluminium Production by Region

1980(16 million tonnes)

Japan7%

Middle East1%

Others8%

China2%

CIS17% Australia

2%

Africa3%

Brazil2%Canada

7%

United States29%

Western Europe

22%

2005(31 million tonnes)

Others9%

United States10%

Africa6%

China22%

CIS14%

Australia6%

Western Europe

14%

Canada9%

Brazil5%

Middle East5%

5

Aluminium for Future Generations Sustainable Development Metrics

ENERGY CONSUMPTION - Electricity used per tonne of aluminium;RECYCLING – Supply of recycled metal back to the industry million tonnes.GREENHOUSE GAS EMISSIONS - Perfluorocarbon (PFC) emissions per tonne of aluminiumEMPLOYEE SAFETY - Lost Time Accident Rate and Recordable Accident RateMANAGEMENT SYSTEMS - ISO certificationsEMPLOYEE HEALTH - Employee Exposure Assessment and Medical Surveillance ProgrammesWATER - Fresh water consumption (a) per tonne of aluminium and (b) per tonne of alumina produced LAND - Proportion of bauxite mining land rehabilitated annually

6

05

1015202530354045

1960 1980 2000 2020

RecycledMetal %

% Post Consumer and Customer Recycled Metalto Total Metal Consumed

Past, Current and Future Global Aluminium Supply Mix

Sector average recycle metal supply from outside our industry:

• has increased from 17% in 1960 to over 32% today;

• is predicted to increase to 37% by 2020.

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“Economic”Performance Metrics

Global primary aluminium and alumina production statistics;Use of aluminium (as consumption per head of the population);Contribution to GDP (measured as net-added value);Total direct employment (indication of the indirect employment multiplier effect);Level of investment (to include new assets, maintenance, environmental protection and research and development);The wages ratio (sector country wages as compared to the national average wages).

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The global percentage of plants with formal mechanisms for consulting the local community;Percentage of plants with workforce training/education schemes and youth employment programmes.(Trainingperformance/hour/person/year);Community Initiatives to improve health, education, environment and the local community;

“Social”Performance Metrics

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Quantitative Global Voluntary Objectives

1. An 80% reduction in Perfluorocarbon (PFC) greenhouse gas emissions per tonne of aluminium produced for the Industry as a whole by 2010 vs 1990;

2. A 10% reduction in smelting energy usage by IAI Member Companies per tonne of aluminium produced by 2010 vs 1990;

3. The IAI Member Companies will seek to reduce GHG emissions from the production of alumina per tonne of alumina produced;

4. A minimum of a 33% reduction in fluoride emissions by IAI Member Companies per tonne of aluminium produced by 2010 vs 1990.

5. A 50% reduction in the Lost Time Accident Rate and Recordable Accident Rate by 2010 vs 2000 by IAI Member Companies,

6. Implementation of Management Systems for Environment (including ISO 14000 or equivalent certification) and for Health and Safety in 95% of IAI Member companies’ plants by 2010;

7. Implementation of an Employee Exposure Assessment and Medical Surveillance Programme in 95% of IAI Member companies’ plants by 2010;

8. The IAI Member Companies will seek to reduce their fresh water consumption (a) per tonne of aluminium and (b) per tonne of alumina produced and will report annually on progress;

9. The IAI Member Companies will seek to continue to increase the proportion of bauxite mining land rehabilitated annually; the IAI will report annually on the proportion of area rehabilitated to area mined.

IAI = International Aluminium Institute

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Tracking Progress –Reduced Sector Electricity Consumption

16.1

15.3

14.514.414.614.815.015.215.415.615.816.016.2

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

Meg

awat

t hou

rs p

er to

nne

of

alum

iniu

m p

rodu

ced

Voluntary Objective

-10% Reduction objective

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78% reduction in PFC emissions per tonne aluminium from 1990 baseline2010 goal is a 80% reduction in PFC emissions per tonne aluminium

Tracking Progress –Reducing GHG Emissions per Tonne

0.00.51.01.52.02.53.03.54.04.55.0

1990 1995 2000 2005 2010

PFC

Em

issi

ons

(t C

O2-

eq/t

Al)

0.96

2010 Objective: 80% reduction

0.88

Linkage of Sector to Corporate Members

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Alcoa Inc.2020 Sustainability Framework

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Alcoa Inc. 2020 Sustainability Metrics/TargetsSafety

Zero fatalities, zero lost workday injuriesZero incidents

HealthBy 2008 20% reduction in number of employees requiring protective measures against

Unacceptable noise levelsUnacceptable workplace exposure to chemicals

Community100% of manufacturing locations will implement the Alcoa Community Framework by 201040% of employees within a business unit or region volunteered in the community through ACTIOM, Bravo! Or Month of Service

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Alcoa Environmental Metrics/Targets/Progress

0 20 40 60 80

Greenhouse Gases

VOC

NOX

Mercury

SO2

Water Use

Landfilled Waste

2006 Actual Goal

Progress Towards 2020 Vision % Reduction from 2000 Baseline

Greenhouse gas 25% reduction vs. a 1990 baseline was achieved in 2001

2008 Goal

2008 Goal

2010 Goal

2008 Goal

2008 Goal

2008 Goal

2010 Goal

Zero non-compliance with Environmental laws & regulations!!

Trend

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Alcoa Iceland FacilitySustainability Assessment Initiative

Developed a framework to assess the performance of Fjarðaál and Kárahnjúkar against sustainability principles (in partnership with energy supplier Landsvirkjun. )

Three phase initiative:1. Development of sustainability objectives, indicators

and measures – input of Stakeholder Advisory Group2. Development of targets3. On-going measurement and reporting of progress

• Input of Stakeholder Advisory Group (30+)• Representative of the community• Balance between social, environment and economic

interests

17

Facility Stakeholder Groups Academic Institutions

UniversitiesTechnical College

Business organizationsContractorCompanies

Iceland GovernmentLocal GovernmentEnvironment ngosInternational NGO –Conservation InternationalTourismUnionsChurch groupsLocal health organization

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BD: Gallup and VR surveysDP: Alcoa/LV

Alcoa/LV employee survey on workplace and job

satisfaction

3.1 Alcoa/LV employee

job satisfaction

3. Satisfaction with workplace

BD: Demographic data for East Iceland and National population from Stats Iceland

DP: Employee data to be collected by Alcoa

Proportion of men and women employed by projects

compared with the National workforce proportion in:

• Management• Clerical/administrative staff• Industrial/manual workers • Engineering/technical staff• Total employees

Ratio of male to female employee salary by job classification

2.1 Gender balance in Alcoa/LV workforce

2. Equality in workforce

BD: Data from Statistics IcelandDP: Statistics Iceland

Gender and age distribution in East Iceland

populations compared to National population

Total population in East Iceland

1.1 Demographi

cs in East Iceland

1. Changes in demographics in local community

Sustainability Objective: Respect and Protect People

Baseline DataMetricIndicatorIssue

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R a t i o n a l e f o r S e l e c t io n a s a n I n d ic a t o r T h e p i n k - f o o t e d g o o s e n e s t s i n t h e r i v e r b a s i n s o f J ö k u ls á á D a l a n d o f J ö k u l s á á F l j o t s d a l . T h e K a r a h n j u k a r p r o j e c t c o u l d h a v e b o t h d i r e c t a n d i n d i r e c t e f f e c t s o n t h e p i n k - f o o te d g o o s e p o p u l a t i o n in t h e s e a r e a s . D i r e c t e f f e c t s i n c l u d e t h e l o s s o f b r e e d i n g h a b i ta t f r o m c r e a t i o n o f H a l s l o n r e s e r v o i r a n d f r o m i n c r e a s e d h u m a n d i s t u r b a n c e a s s o c ia te d w i t h o p e r a t i o n o f t h e p r o j e c t . P o t e n t i a l in d i r e c t ( i . e . , n o t s o l e l y c a u s e d b y t h e p r o j e c t ) e f f e c t s i n c l u d e r e d u c t i o n o f h a b i t a t q u a l i t y o r d i s p l a c e m e n t o f i n d i v i d u a l s d u e t o i n c r e a s e d h u m a n a c c e s s to t h e h i g h l a n d s f a c i l i t a t e d b y p r o j e c t - r e la t e d r o a d s . N o n - p r o j e c t f a c t o r s a l s o i n f l u e n c e t h e E a s t I c e l a n d p o p u l a t i o n o f p i n k - f o o t e d g o o s e , p a r t i c u l a r l y t h e a v a i l a b i l i t y a n d q u a l i t y o f w i n t e r i n g g r o u n d s i n th e U n i t e d K i n g d o m . T h e p i n k - f o o t e d g o o s e i s a B e r n C o n v e n t i o n A p p e n d i x I I I s p e c ie s , m e a n i n g t h a t i t i s a p r o te c te d s p e c i e s i n n e e d o f c o n s e r v a t io n . R a t i o n a le f o r s e le c t i n g p i n k - f o o t e d g o o s e a s a n i n d i c a t o r i n c l u d e r e le v a n c e to p r o j e c t s ( d i r e c t a n d i n d i r e c t p r o j e c t e f f e c t s ) , a v a i l a b i l i t y o f q u a l i t y b a s e l in e d a t a , s e n s i t i v i t y t o c h a n g e , a n d t h e a b i l i t y o f t h e i n d i c a t o r to s h o w m e a n i n g f u l t r e n d s o v e r t i m e . M e t r i c N u m b e r o f b r e e d in g p a i r s o f p i n k - f o o t e d g o o s e i n th e J ö k u l s á á D a l a n d J ö k u l s á á F l j o t s d a l r i v e r b a s i n s . T h i s m e t r i c w o u l d b e m o n i to r e d d u r i n g t h e c o n s t r u c t i o n a n d o p e r a t i o n a l p h a s e s o f t h e p r o j e c t s . B a s e l in e T h e s to c k o f b r e e d i n g p i n k - f o o te d g e e s e h a s b e e n m o n i t o r e d i n t h e h i g h l a n d s o f E a s t I c e l a n d f r o m 1 9 6 0 t h r o u g h t h e p r e s e n t b y t h e I c e l a n d i c I n s t i t u t e f o r N a t u r a l H i s t o r y ( I I N H ) . T h e E a s t I c e l a n d b r e e d i n g p o p u l a t i o n h a s b e e n i n c r e a s i n g s t e a d i l y a n d t h e s t o c k i s c u r r e n t l y a t a n a l l t i m e h i g h . F r o m 1 9 8 1 u n t i l 2 0 0 0 , t h e n u m b e r o f b r e e d i n g p a i r s q u a d r u p le d t o r e a c h a to t a l o f o v e r 7 ,0 0 0 p a i r s i n th e y e a r 2 0 0 0 . O f t h o s e 7 ,0 0 0 p a i r s , 3 ,3 0 0 p a i r s n e s t i n t h e r i v e r b a s i n o f J ö k u l s á á D a l . O f th o s e 3 ,3 0 0 p a i r s , 5 0 0 a r e i n t h e a r e a t h a t w i l l b e d i r e c t l y i m p a c t e d b y c r e a t i o n o f H a ls l o n r e s e r v o i r . T h o s e 5 0 0 p a i r s r e p r e s e n t 7 p e r c e n t o f t h e E a s t I c e l a n d b r e e d i n g p o p u l a t i o n a n d 1 .6 p e r c e n t o f b r e e d in g p a i r s o f t h e e n t i r e b r e e d i n g s t o c k w o r l d w i d e . T h e R a m s a r c o n v e n t i o n d e f in e s a n a r e a o f i n te r n a t i o n a l i m p o r ta n c e f o r a b i r d s p e c i e s i f 1 p e r c e n t o r m o r e o f t h e s t o c k d e p e n d s o n t h e a r e a .

I n d i c a to r 2 7 .1 P in k - f o o t e d G o o s e

Number of Breeding Pairs of Pink Footed Geese In East Iceland Highlands

0

1000

2000

3000

4000

5000

6000

7000

8000

1982 1984 1986 1988 1990 1992 1994 1996 199 8 20 00

Year

Num

ber o

f bre

edin

g pa

irs

N u m b e r o f b r e e d i n g p a i r s o f p in k - f o o t e d g e e s e in E a s t I c e la n d 1 9 8 2 - 2 0 0 0

( S o u r c e : I I N H , 2 0 0 4 )

The End !!!