AWAC's Governance Framework
AWAC has a clearly defined governance and management framework which relies on informal and formal mechanisms.
Alcoa as manager of the joint venture has key operating responsibility.
Regular contact between Alumina Limited and Alcoa, is the most effective and immediate way for the joint venture to operate in a dynamic global environment. Senior managers and board members hold regular face-to-face meetings and site visits, which is supported through online communications.
Formal governance is based on the AWAC Agreements from 1995 (the Formation Agreement and the Charter of the Strategic Council) and includes Alumina Limited’s participation in:
- AWAC’s Strategic Council and
- the Alcoa of Australia (AofA) Board.
- the AWA of Brazil SA Advisory Board (effective late 2011)
AWAC's Strategic Council
The Strategic Council is AWAC’s formal governing body. It has five members, three appointed by Alcoa (of which one is Chairman) and two by Alumina (of which one is Deputy Chairman). In 2015 those representatives were the Chief Executive Officer, Peter Wasow, and Chief Financial Officer, Chris Thiris.
The Strategic Council meets to consider:
- AWAC’s long-term strategy
- Development, acquisition and disposal of assets
- Sustainability matters
- Capital and operating budgets of AWAC companies
- Industry and market outlook.
While meetings are usually held twice a year, this can vary depending on business requirements. The Council receives detailed reports of AWAC’s sustainability performance against targets and key indicators.
Alcoa of Australia Board
In Australia, AWAC operates as Alcoa of Australia (AofA). It runs an integrated aluminium business including mining, refining and smelting operations. As AofA represents 60 per cent of AWAC’s operations, two representatives from Alumina Limited sit on its five-person board. In 2015 those representatives were the Chief Executive Officer, Mr Peter Wasow, and Chief Financial Officer, Mr Chris Thiris.
This Board meets four times a year to discuss:
- AofA’s performance and outlook
- Occupational health and safety and environmental performance
- Significant business issues relevant to Alcoa of Australia
2015 governance developments
During 2015 Alumina Limited and Alcoa maintained their established governance structures that were developed over recent years to establish targets, define strategy, integrate sustainability actions into business strategy and to measure and monitor performance. This approach has resulted in enhanced reporting of AWAC sustainability matters to Alumina Limited.
Joint governance stuctures include:
- Establishment of the AWA of Brazil Advisory Board, which recognises the growing importance of the Brazilian operations to AWAC’s future as well as the complex nature of working in areas of high biodiversity with indigenous local communities;
- Increasing sustainability reporting at Strategic Council to include a more detailed report of AWAC site sustainability performance against targets and key indicators.
AWAC Site Visits
Alumina runs a program of site visits for Board and senior management. Site visits include:
- Discussions with site operational managers,
- Site operational tours,
- discussion with industry experts, and
- Meetings with representatives of local communities.
Alcoa integrate sustainability into 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.
Alcoa are committed to regularly reviewing our strategy and performance, and have been setting goals and publicly reporting our results against them since 1993. Their objective is to be transparent with respect to their sustainability issues and progress and to provide significant information to all of our stakeholders. In 2009, they developed a new set of long-term goals and objectives to drive progress in the businesses by 2020 and, for some areas, by 2025 or 2030. These strategic sustainability targets are used to monitor progress against key focus areas, which include energy efficiency, emissions, and waste. Sustainability scorecards measure progress against our near-term sustainability targets and seamlessly integrate sustainability concepts into our business processes. Sustainability scorecards measure progress against near-term sustainability targets and seamlessly integrate sustainability concepts into business processes. The scorecards allow the business 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.
The Alumina Limited Board is the organisation’s highest governing body. In 2015 it comprised one executive director (the Chief Executive Officer), four independent non-executive directors and one non-independent non-executive director. The Board conducted 11 scheduled meetings throughout the year. In 2015, Alumina Limited’s executive team, headed by the Chief Executive Officer, Peter Wasow, reported directly to the board. Annually the Board receives a report on the progress of sustainability and climate change initiatives and regularly receives information regarding climate change in relation to projects and other sustainability initiatives.
In terms of sustainability governance for AWAC, Alumina Limited’s principal interest is the integration of sound environmental, social and governance practices alongside sustainable financial performance. Direct reporting is courtesy of Alumina Limited's joint venture partner Alcoa. Alcoa is the manager/operator of AWAC's global facilities. AWAC is governed by a Strategic Council which comprises 2 representatives from Alumina Limited and 3 representatives from Alcoa. The Strategic Council meets twice per annum and metrics on progress to sustainability targets are reviewed. Sustainability targets are established by Alcoa for various sustainability matters including GHG emissions and water usage that include the joint venture (AWAC) assets.
Within Alcoa, it has established an Executive Council that includes the CEO, group business unit presidents and functional officers. The Executive Council is accountable for setting annual targets and measuring progress against those targets as well as longer-term goals. In 2010, Alcoa created the role of Chief Sustainability Officer (CSO) who is responsible for developing a comprehensive strategy that integrates all of Alcoa's sustainability efforts including climate change. Business leaders are responsible for the integration of sustainability and climate change strategies into their respective business plans and practices, and internal sustainability experts in each global region and business assist in the implementation of these strategies and processes. Alcoa directs globally consistent and connected initiatives around five main elements of climate strategy: 1) emissions reduction, 2) strategic energy decisions, 3) stakeholder and policy engagement, 4) product advantage, and 5) climate adaptation. In 2012, the Council approved revised mid-term and long-range (2020/2030) global sustainability targets related to energy and GHG emissions. Revised targets are reviewed and approved by the Public Issues Committee of the Alcoa Board.
Once the internal processes are completed by Alcoa, including gathering data and analysing performance against targets, the sustainability aspects that relate to the AWAC joint venture operations are separately reported to AWAC's governing body the Strategic Council. Alumina Limited's two representatives on the Strategic Council review and analyse the material and have opportunity to provide input. Sustainability information received at the Strategic Council is reported to the Alumina Limited Board.
Alumina Limited's management is updated on sustainability objectives, measures and performance via the Strategic Council and the various AWAC entity boards of which Alumina's CEO and CFO sit as directors. Management report sustainability matters to the Board.