Sustainability & Alumina
Alumina Limited understands the fundamental link between long-term profitability and the sustainability of AWAC’s operating performance. Decisions and actions we make today influence future economic, environmental and social outcomes, and determine long-term profitability and returns for our shareholders.
Sustainable development and growth is fundamental to AWAC, and we recognise our joint venture partner, Alcoa, as a world leader in corporate sustainable development.
Alumina Limited’s role is to support Alcoa in managing AWAC to achieve best practice in environment, safety, community and financial performance through strong, collaborative and informed governance.
We do this through:
- reviewng AWAC’s long-term sustainability strategies and objectives with managing partner Alcoa
- supporting the sustainability policies and practices that Alcoa implement in AWAC to ensure sustainable operations
- reviewing reports of non-compliances on human rights, environmental, labour or anti-corruption grounds.
Alumina Limited’s Board assesses any potential risks and opportunities for shareholders from AWAC’s sustainability performance. We do this at through using our own risk assessment processes that are reviewed and updated through the Board of Directors.
Alumina Limited’s operations
Alumina Limited is also committed to sound corporate and social policies within our business activities and strategy, the results of which are included throughout this report. Our activities are informed and guided by our Sustainability Policy.
AWAC Sustainability Oversight
Alcoa integrate sustainability into core business strategy using a multi-layered structure:
The CEO of Alcoa has the ultimate responsibility for economic, environmental and social topics. The CFO is responsible for the economic topics and the vice presidents for sustainability and human resources have responsibility for environmental and social topics.
From a governance and board perspective, responsibility for oversight of Alcoa’s corporate and social responsibility, including but not limited to safety and health, good corporate citizenship, environmental sustainability and social issues, policies and practices rest with its Safety, Sustainability and Public Issues Committee. Responsibility includes providing oversight of the Alcoa’s risk management policies and procedures relating to aforementioned topics.
The Safety, Sustainability and Public Issues Committee meets at least twice per annum and reports as appropriate on, current and emerging safety and health, environmental and sustainability, social and political trends, major global legislative and regulatory developments or other government relations, trade or public policy issues that may affect the business operations, performance of Alcoa. Also, the Committee advises the Alcoa Board on Alcoa’s progress against its key environmental sustainability targets and related initiatives including advice on how to improve its performance against targets and stakeholder concerns on those matters. Alcoa’s Board of Directors and its committees review impacts, risks and opportunities at regularly scheduled board/committee meetings five to six times a year.
Alcoa are committed to regularly reviewing its strategy and performance and have been setting goals and publicly reporting 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 their 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.
The Alumina Limited Board is the organisation's highest governing body. In 2017, Alumina Limited’s executive team, reported directly to the board. Annually the Board receives a report on the progress of sustainability initiatives.
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.
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 is responsible for the preparation of the sustainability update and report sustainability matters to the Board.
In 2017, for AWAC employees, up to 20% of their variable compensation plan was tied to achieving significant aspects of sustainability targets. Those targets included safety, diversity representation in our workforce, and reductions in carbon dioxide (CO2) emissions due to process improvements and improved energy efficiency. These targets were represented by the following percentages at the corporate level, Safety 5%, Diversity 10% and Carbon dioxide reductions 5%. 2017 payouts were 11.4% for diversity and 0% for safety due to two contractor fatalities and meeting carbon dioxide emissions targets. The target for carbon emissions was not achieved due to lower raw material quality impacting some refinery performance and interrupted power supply at the Portland aluminium smelter.
The AWAC facilities have implemented the scorecard processes which are reviewed by Alcoa’s executive management at Quarterly Business Reviews.We full support this approach, which will embed sustainability deeper into AWAC and its everyday activities.
The processes used in the aluminium industry are energy and resource intensive and that presents sustainability challenges. AWAC is predominantly involved in the refining of alumina from bauxite and also has interests in an aluminium smelter. Refining alumina from bauxite requires significant energy in the form of heat and steam. Aluminium smelting requires significant amount of electricity to convert alumina into aluminium metal via a process of electrolysis.
While the production of alumina and aluminium generate substantial economic and social benefits, we are mindful of the need to balance these activities with responsible environmental stewardship to minimise negative impacts on local environments and neighbouring communities. In 2017 some of the major sustainability challenges for AWAC were:
- eliminating employee and contractor fatalities and abating risks of injury or operational sickness.
- cleaner energy sources for an energy intensive business (experts are assessing the potential to harness solar energy)
- Improving energy efficiency - to conserve energy and reduce associated emissions
- Bauxite residue and storages – to reduce footprint and move towards alternative uses for residue (new filtration technology has been introduced)
- Carbon emission reductions – to improve the emissions intensity and reduce absolute emissions
- Improve water management – to reduce freshwater usage.
- Minimising impacts to the land and biodiversity.
Alumina Limited’s commitments for improving sustainability performance include:
- Supporting Alcoa’s approach to drive sustainability practice throughout the operations using Sustainability Scorecard and Business unit Roadmap initiatives
- Transitioning to cleaner energy sources
Continue to investigate opportunities for new technologies for reducing greenhouse gas emissions and developing cleaner energy sources for discussion with Alcoa.