Environmental

2003 Sustainability Report

Social

Economic CEO Statement

Performance rather than talk is Alcoa’s way of demonstrating progress toward a sustainable future. Through our 2020 strategic framework, we have established clear targets to support our vision of becoming the best company in the world. In this report, we offer you a collection of data and information that measures our progress. This is Alcoa’s second Sustainability Report, the latest offering in a long tradition of reporting. This year, for the first time, we are releasing it simultaneously with our 2003 Annual Report to offer you a comprehensive view of the company. We are also fully integrating the Sustainability Report within alcoa.com and its Alain J. P. Belda associated regional and location websites. Chairman and Chief Executive Officer

We hope these improvements allow a Read in its entirety, the information ● Since we published our strategic broader and timelier exploration of presented on alcoa.com shows strong environmental targets in 2000, our global performance than can be progress in all our economic, envi- we’ve reduced water use by 16%, accomplished purely between the ronmental, and social activities. The landfilled waste by 44%, and covers of a printed report. In following highlights serve to illus- greenhouse gas emissions by 25% response to input from external trate that: (from 1990). Our rapid integration stakeholders, we have improved the process will ensure that we see sim- ● Our total shareowner return for usability of the Sustainability Report ilar progress in the waste streams 2003 was more than 71%, mean- with, for example, the inclusion of that come to us through our acqui- ing US$100 invested (with divi- an index based on Global Reporting sitions. dends reinvested) at the beginning Initiative (GRI) indicators. We hope of the year would be worth more Strategic ■ Water that index makes it easier to com- ■ Landfilled Waste than US$171 as of December 31, Environmental Targets ■ Greenhouse pare our performance with other (percent reduction since 2000) Gas Emissions 2003. In comparison, the Dow organizations using the GRI report- Jones Industrial Average, of which 16 ing guidelines. 2003 44 we are a component, returned 251

approximately 28% during the 020406080100 same period. 1Reduction from 1990.

Total Shareowner ■ Alcoa Return ■ Dow Jones (percent) Industrial Average

71 2003 28

020406080100 ● In 2003, we had the best lost work- Lost Workdays ■ Lost Workdays From all this, I trust you can see that ■ US Industry Average day and total recordable injury Alcoa considers sustainability report- 0.18 2000 rates in the company’s history. Our 2.0 ing an important tool for providing lost workday rate improved to 0.12 0.16 meaningful information to our many 2001 from 0.15 the previous year, and 1.8 stakeholders. But it is just that; a 0.15 2002 our total recordable rate was 1.66, 1.7 tool to assess our performance. What 0.12 down from 2.22 in 2002. More 2003 really counts is how we are doing on than 99.8% of our 120,000 the ground. As this commitment to employees worked through 2003 0 0.5 1.0 1.5 2.0 reporting is shared with customers, without incurring a lost workday 2003 industry average not available suppliers, shareholders, employees, injury. Regrettably, despite this and representatives of communities In addition to the data in our report- improvement, we experienced four where we have a presence world- ing, we are playing an active role in fatalities. That is why we are wide, I hope it will be used to help international efforts on sustainable increasing our emphasis on identi- identify areas where we can collabo- development. We are helping lead the fying difficult-to-predict, low-prob- rate even more productively in pur- Aluminum Sustainable Development ability events that have potential suit of a sustainable future. Initiative of the International for catastrophic consequences — Aluminum Institute, and we have I invite you to submit your com- and why we are analyzing the caus- committed to report against the ments about this report through es of human error and how to pre- Sustainable Development Principles our dedicated e-mail address — vent them. developed by the International [email protected] — or via ● As we went to press with this Council on Mining and Metals. our online survey. report, we were again named one of Fortune Magazine’s “Most Admired Companies.” We also ranked second in terms of social responsibility among all companies Alain J. P. Belda in all industries. In addition, we Chairman and Chief Executive Officer were the number one company in the metals category. Table of Contents

Vision and Strategy...... 3 Social Performance Indicators...... 28 Organizational and Work Environment...... 28 Report Profile...... 6 Health and Safety...... 30 Organizational Profile...... 6 Human Rights...... 34 Report Scope...... 6 Society...... 35 Report Profile...... 7 Product Responsibility ...... 41

Governance Structure and Economic Performance Management Systems ...... 8 Indicators...... 42 Structure and Governance...... 8 Long-term Stakeholder Engagement ...... 14 Shareholder Value ...... 42 Overarching Policies and Customers...... 47 Management Systems ...... 14 Supplier Relationships...... 49 Public Commitment ...... 49 Environmental Performance Indicators...... 16 Awards and Recognition ...... 50 Material Use ...... 16 Internal Awards and Energy...... 17 Recognition...... 50 Water...... 19 External Awards and Biodiversity ...... 19 Recognition...... 53 Emissions, Effluents, and Waste...... 21 Products and Services ...... 25 Case Studies...... 57 Environment, Health, and Safety GRI Content Index ...... Compliance ...... 26 58 Capital Expenditures ...... 27

Forward-looking Statement Certain statements in this report relate to future events and expectations and as such constitute forward-looking statements. Forward-looking statements also include those containing such words as “anticipates,” “believes,” “estimates,” “expects,” “hopes,” “targets,” “should,” “will,” “will likely result,” “forecast,” “outlook,” “projects” or similar expressions. Such forward-look- ing statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Alcoa to be different from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include material adverse changes in economic or aluminum industry conditions generally, including global supply and demand con- ditions and prices for primary aluminum, alumina and other products, or material adverse Reporting Framework changes in the markets served by Alcoa; the company’s inability to achieve the level of cost sav- As yet, there are no Generally Accepted ings, productivity improvements or earnings growth anticipated by management, whether due to Accounting Principles for reporting social and significant increases in energy, raw materials or employee benefits costs or other factors; changes environmental performance. We continue to in laws or governmental regulations or policies in the countries in which Alcoa operates, includ- use the reporting framework emerging from ing those affecting environmental, health or safety compliance; relationships with and financial the voluntary Global Reporting Initiative as and operating conditions of customers and suppliers; and the other risk factors summarized in well as criteria established by other organiza- Alcoa’s Form 10-K for the year ended December 31, 2003 and other SEC reports. tions to guide the structure of this report.

Vision and Strategy

Sustainable Development Our commitment to sustainability ● Elimination of all injuries and Alcoa concurs with the definition of has a long history and is evident work-related illnesses and the sustainability first published within everyday — from the way we live elimination of waste. the World Commission on our Values to the following strategic ● Integration of environment, health, Environment and Development’s framework for sustainability sup- and safety with manufacturing. 1987 Brundtland Report, also ported by measurable objectives for known as Our Common Future. guiding our operations. ● Products designed for the environ- This report defined sustainable ment. ● Supporting the growth of customer development as “development that businesses. ● Environment, Health, and Safety meets the needs of the present as a core Value. without compromising the ability ● Standing among the industrial of future generations to meet their companies in the first quintile of ● An incident-free workplace (an own needs.”1 return on capital among Standard incident is any unpredicted event & Poor’s Industrials Index. with capacity to harm human At Alcoa, sustainability is defined as health, the environment, or using our Values to build financial physical property). success, environmental excellence, and social responsibility through ● Increased transparency and closer partnerships in order to deliver net collaboration in community-based long-term benefits to our shareown- environmental, health, and safety ers, employees, customers, suppliers, initiatives and the communities in which we 1World Commission on Environment and operate. Development, April 1987, Oxford University Press, Introduction — pp 22-23 IV.

Ten Million Trees reduce stormwater runoff, enhance the aesthetics of the facilities, and absorb When Alcoa’s Chairman and CEO Alain Schoolchildren help plant Alcoa’s first carbon dioxide from the atmosphere. Belda planted a seedling on June 5, seedlings in Iceland. 2003, in Poços de Caldas, Brazil, Alcoa Trees can also be planted at home, in employees had, in five years, fulfilled a Each participating Alcoa location pur- parks (with appropriate permission), or goal to plant one million trees around chases trees for the Ten Million Trees at other places that are of special the world within 10 years. That achieve- program from a supplier of its choice, significance for individuals or communi- ment triggered the beginning of another and the location’s employees select the ties. Many Alcoa locations routinely use ambitious initiative: to plant 10 million types of trees used to match local condi- a tree-planting ceremony as a way to trees by 2020. tions and purposes. welcome and recognize prominent visi- tors to the facilities, providing a perma- The Ten Million Trees program counts Under this program, employees are nent memorial to honor those visitors. and recognizes the trees personally encouraged to plant their trees on the planted by Alcoa employees, contractors, Alcoa property where they work to help A tree census is conducted each suppliers, and their families worldwide. emphasize the progress toward sustain- December, and locations report on the These trees are planted in addition to ability of Alcoa operations and to number of trees planted during the those used in revegetation programs that enhance the environment around the year as part of the program. Updates Alcoa routinely undertakes as part of its company’s facilities. Integrated into facili- on various plantings around the world mine rehabilitation programs. ty land management plans, the trees are available on alcoa.com. provide shade, offer habitat for wildlife, 3 Vision and Values Profitability processes to achieve an EHS At Alcoa, our vision is to be the best We earn sustainable financial results incident-free workplace. company in the world — in the eyes that enable profitable growth and ● We do not compromise our EHS of our customers, shareholders, superior shareholder value. Value for profit or production. communities, and people. We expect Accountability and demand the best we have to ● We comply with all laws and set We are accountable — individually offer by always keeping Alcoa’s higher standards for ourselves and and in teams — for our behaviors, Values top of mind. our suppliers where unacceptable actions, and results. risks are identified. Integrity We live our Values and measure our Alcoa’s foundation is our integrity. ● We support pollution prevention success by the success of our We are open, honest, and trustwor- and sustainable development, by customers, shareholders, communi- thy in dealing with customers, incorporating social responsibility, ties, and people. suppliers, coworkers, shareholders, economic success and environmen- and the communities where we have Principles tal excellence into our decision an impact. Integrity making process. ● We live our Values everywhere, all Environment, Health and Safety ● We measure and assess our per- of the time. We work safely in a manner that formance and are open and trans- protects and promotes the health ● We demonstrate integrity in our parent in our communications. and well-being of the individual and behavior and actions. ● We supply and use safe and reli- the environment. ● We keep our promises. able products and services. Customer ● We have the confidence and ● We use our EHS knowledge to We support our customers’ success courage to ask for help. enhance the safety and well-being by creating exceptional value of our communities. through innovative product and ● We expect integrity from every ● service solutions. Alcoan and do not tolerate We are all accountable for unethical behavior. conforming with and deploying Excellence our EHS Value and Principles. We relentlessly pursue excellence in ● We avoid conflicts of interest but 1 will declare situations where they In 2003, we updated the Principles under- everything we do, every day. lying Alcoa’s EHS Value to more clearly may occur. People spell out Alcoa’s commitment to continual improvement and pollution prevention. We work in an inclusive environ- ● We expect integrity from our ment that embraces change, new customers, suppliers, and others ideas, respect for the individual, and who do business with us. equal opportunity to succeed. ● We communicate openly with individuals and communities on issues that affect them. Environment, Health and Safety1 ● We value human life above all else and manage risks accordingly.

● We relentlessly pursue and contin- ually improve EHS systems and

4 Vision and Strategy

Customer ● We empower our people through a ● We earn our right to grow by ● We deeply understand our diverse learning organization to achieving returns that exceed our customers needs and consistently capture the best from everyone. cost of capital. meet or exceed them through ABS. People ● We aggressively pursue organic ● We build strong long-term ● We treat each other with dignity growth by creating exceptional customer relationships at all levels. and respect at all times. value for customers.

● We cross organizational and ● We seek to understand each others ● We make strategic acquisitions and geographic boundaries to seam- ideas and suggestions. integrate them excellently. lessly serve customers. ● We value diversity and our individ- ● We openly and effectively commu- ● We are the leader in our chosen ual differences. nicate our financial results inter- market segments. nally and externally. ● We create and seize opportunities ● We develop innovative product, for growth and development. ● We do not make money at the service, and information solutions. expense of our Values. ● We seek and accelerate change. ● We develop and nurture clear Accountability ● We continuously re-design our Alcoa and product brand ● We first recognize our role and work to eliminate waste and identities. responsibilities, then take owner- improve the value of our work. ship, and accept the consequences ● We develop and maintain a ● We provide appreciative and of our actions. strong commercial organizational constructive feedback to each capability. ● We act with a sense of ownership other to improve our individual in our workplace. Excellence and team performance. ● We continuously set goals beyond ● We encourage an environment of ● We create the appropriate balance the best. risk taking within the context of in our work and family lives. accountability. ● We demand, recognize, and reward ● We create value in the community excellence. ● We solve the problems in our area in which we live and work, of responsibility and drive continu- ● We achieve system excellence through our presence and leader- ous improvement of our work. through application of the rules of ship. our system and by rapidly imple- ● We do what we say we will do. Profitability menting best practices. ● We all understand how our job ● We communicate openly as posi- ● We eliminate waste by rapidly contributes to profitability. tive team members to increase the solving problems at their source. performance of our teams. ● We eliminate waste every day, ● We move practical and theoretical reducing our costs and capital ● We recognize the impact that our limits through innovation. requirements. own actions have in all outcomes.

● We have rapid change as a ● We recognize individual and team mindset. accomplishments and successes. ● We are committed to excellence by living our Values.

5 Profile

ORGANIZATIONAL Key Statistics (As of December 31) PROFILE Employees Sales* Debt* Equity* Assets* 2002 127,000 20,351 8,488 9,927 29,810 Reporting Organization 2003 120,000 21,504 7,271 12,075 31,711

Alcoa Inc. *Millions of US dollars Please see endnote on page 49 for an explanation on data changes from 2002 reporting. Products and Services Ten-year historical data can be found in Annual Report. In addition to aluminum products and components, Alcoa also markets REPORT SCOPE use the information as a tool for develop- consumer brands including Reynolds ing action plans, corrective actions, goal Contact Person Wrap® aluminum foil, Alcoa® wheels, setting, and progress measurement. Anita Roper and Baco® household wraps. Among Director — Sustainability We have expanded the original data sys- our other businesses are vinyl siding, tem to include incident management, and closures, precision castings, and elec- If you would like to write to us we now use the system for all environ- trical distribution systems for cars about this sustainability report, please mental, health, and safety data collection and trucks. send an e-mail to sustainability and analysis, incident management, and @alcoa.com. To provide anonymous reporting. At any time, we can use the Number of Locations feedback, please complete our online system to determine current safety statis- 2000 459 survey at http://www.surveymonkey tics, including accidents or near misses .com/s.asp?u=8114403192. that occur anywhere in the world on a 2001 459 Reporting Period particular day. We can also view detailed 2002 482 January 1 through December 31, 2003. reports on incidents, evaluate the correc- This is Alcoa’s second sustainability tive action plans or status of a corrective 2003 474 report in this format, but we have been action, and evaluate our progress toward reporting publicly on our global EHS our goals in environment, health, and 0 100 200 300 400 500 safety. The system is an excellent man- As of year end. performance for 11 years and commu- nity involvement for four years. agement tool that has helped us facilitate our rapid progress in these areas. Countries with Alcoa Operations Generally, we have provided four years As part of our commitment to open- As of the end of 2003, Alcoa operat- of data for each performance indicator. ness and transparency, we began pub- ed in 41 countries. A complete cur- Beginning with our 2004 report, we lishing real-time safety data publicly rent list is available on alcoa.com. will provide and maintain up to five years of data when available. on alcoa.com in 2003 to provide timely Nature of Ownership insight into our performance on this Formed in 1888 under the laws of Boundaries of Report critical measure. Data contained in this report are for the Commonwealth of Pennsylvania, We continue to work on determining Alcoa’s global operations unless oth- Alcoa Inc. is a publicly listed compa- what regional or global metrics are erwise noted as regional. ny on the New York Stock Exchange required to guide us toward the achieve- (NYSE ticker symbol: AA). Alcoa Metrics System ment of sustainability, particularly in the Markets Served Alcoa’s metrics system is the source of more complex and difficult-to-measure Alcoa serves customers in the aero- much of the data in this report. social aspects of our operations. space, alumina, aluminum, automo- In 1988, Alcoa initiated a process to Basis for Reporting on Joint tive, commercial transportation, collect and display current detailed Ventures, Partially Owned building and construction, industrial information on safety in a way that Subsidiaries, Etc. products, and packaging and con- would be available to all employees. We Data in this report are drawn from those sumer markets. built a system that allows every location operations where Alcoa has majority to enter data electronically through interest and/or management control. interactive computer displays, and we 6 Profile

REPORT PROFILE tems for collecting and collating that San Antonio, Texas (USA)* This second sustainability report con- data already exist or that we can Seattle, Washington (USA)* tinues our evolution toward an inte- make a reasonable estimate. Texarkana,Texas (USA)* grated report highlighting economic, We also offer readers opportunities *A single report published for communities with Alcoa Mill Products locations. social, and environmental aspects of to look beyond the boundaries of our operations. With its emphasis on this corporate sustainability report Alcoa News Briefs online presentation, this report also by reviewing these additional publi- These news items cover activities represents our commitment to use cations found on alcoa.com. from Alcoa operations worldwide modern technology to rapidly and can be found in Alcoa’s 2003 Alcoa Annual Report increase the availability and timeli- Annual Report. ness of the report. Publication of the Alcoa 2003 Sustainability Report has been syn- Criteria/Definitions In preparing this report, we initiated chronized with publication of the Please refer to the Alcoa 2003 direct consultation with a number of Alcoa 2003 Annual Report. Annual Report for details on our interested stakeholder groups and dis- financial accounting policies. tributed an online survey via CSRwire Regional Sustainability Reports Three regional sustainability reports to more than 4,500 organizations that Internal Report Assurance were published in 2002. These are are in contact with potential readers Alcoa management is responsible for effectively regional chapters that add who have a stated interest in corporate the integrity of the data published in depth and breadth to the corporate social responsibility. Thirty-seven peo- this report. The company maintains a report and web pages. ple responded to the online survey. system of internal controls, including Alcoa in Australia On the basis of inputs from this con- accounting controls and a strong pro- Alcoa in Canada sultative process, we have retained gram of internal and external audit- Alcoa Latin America the basic structure of our 2002 ing. The system of controls provides Sustainability Report with perform- Location Reports for appropriate procedures that are ance data supported by illustrative Within each region, a number of consistent with high standards of case studies. Case studies are present- operating locations published 2002 accounting and administration. This ed here as summaries, which are gen- community reports that brought report has been prepared within the erally drawn from more detailed and localized insight into our operations. framework of those standards. localized progress reports that are Warrick, Indiana (USA) Independent Report Assurance published and updated on alcoa.com. Massena, New York (USA) In considering independent verifica- Links within the summarized case Tennessee Operations (USA) tion of this report, we have consulted studies lead directly to those expand- Rockdale, Texas (USA) with a number of interested stake- ed versions when they are available. Atlanta, Georgia (USA)* holders and determined that, at this This year, we have introduced an Chicago, Illinois (USA)* stage, no single source of verification index to help interested readers com- Danville, Illinois (USA)* will necessarily satisfy every individ- pare the information contained in our Davenport, Iowa (USA)* ual stakeholder group. Alcoa remains report with the Global Reporting Dallas, Texas (USA)* committed to the principle of a credi- Initiative guidelines. We also draw Hutchinson, Kansas (USA)* ble and meaningful verification upon criteria from other organizations Detroit, Michigan (USA)* process, and we will continue to to frame our sustainability reporting. Irvine, California (USA)* explore this issue and report on Los Angeles, California (USA)* progress. Throughout this report, we have Lancaster, Pennsylvania (USA)* selected data that we believe con- Philadelphia, Pennsylvania (USA)* Information Requests tribute to meaningful insight into Please visit alcoa.com for additional Alcoa operations worldwide. We also information about Alcoa’s economic, selected data on the basis that sys- environmental, and social performance.

7 Governance Structure and Management Systems

STRUCTURE AND operating officer of Nissan Motor 2003 and member of the Managing GOVERNANCE Company, Ltd. from 1999. From Board of Siemens AG from Alcoa endorses The Business 1996 to 1999 he was executive vice December 2002 to December 2003; Roundtable Principles of Corporate president of Renault S.A., and from chief operating officer of Siemens Governance, which is a comprehen- 1979 to 1996 he served in various Corporation from January to sive statement of responsible corpo- capacities with Compagnie Générale December 2001. From January to rate governance principles dated des Etablissements Michelin. Director December 2000, he was executive May 2002. These principles and the of Alcoa since 2002. vice president of Siemens Medical Engineering Group. For two years NYSE Listing Standards provide the Joseph T. Gorman, 66, chairman until December 1999, he was presi- foundation on which our Corporate and chief executive officer of dent of the angiography, fluoroscopy, Governance Guidelines and our Moxahela Enterprise, LLC, a and X-ray systems businesses of board committee charters are based. venture capital firm, since 2001. He Siemens Medical Group. Director of was chairman and chief executive Board of Directors Alcoa since 2003. (As of February 20, 2004) officer of TRW Inc., a global compa- ny serving the automotive, space, and John Mulroney, 68, president of the Alain J.P. Belda, 60, chairman of the information systems markets, 1988- Opera Company of Philadelphia board of Alcoa since January 2001, 2001. Director of Alcoa since 1991. since 2003; executive director 1999- and chief executive officer since May 2003; former president and chief 1999. Elected president and chief Judith M. Gueron, 62, president of operating officer of Rohm and Haas operating officer in January 1997, MDRC (formerly Manpower Company, a specialty chemicals vice chairman in 1995, and executive Demonstration Research Corpora- manufacturer, from 1986-1998. vice president in 1994. President of tion), a nonprofit research organiza- Director of Alcoa since 1987. Alcoa Aluminio S.A. from 1979 to tion, since 1986; executive vice presi- 1994; president — Latin America in dent for research and evaluation Henry B. Schacht, 69, director and 1991. Director of Alcoa since 1998. 1978-1986. Director of Alcoa since senior advisor to Lucent Technologies 1988. Inc., a communications systems and Kathryn S. Fuller, 57, president of services company, since February the World Wildlife Fund U.S. Sir Ronald Hampel, 71, former 2003. On unpaid leave from (WWF), an independent organization chairman of United Business Media, Warburg Pincus as managing direc- dedicated to the conservation of a U.K.-based media company, from tor and partner. Served as chairman nature, since 1989; various positions 1999-2002; chairman of Imperial of Lucent Technologies Inc. from with the organization since 1982 Chemical Industries plc (ICI) 1995- October 2000 to February 2003 and including executive vice president, 1999, and a director 1985-1999; from 1996 to 1998; chief executive general counsel, and director of deputy chairman and chief executive officer from October 2000 to WWF’s public policy and wildlife officer 1993-1995; chief operating January 2002 and from February trade monitoring programs. Director officer 1991-1993. Director of Alcoa 1996 to October 1997; and senior of Alcoa since 2002. since 1995. advisor from February 1998 to Carlos Ghosn, 49, president and Klaus Kleinfeld, 46, member of the February 1999. Was managing direc- chief executive officer, Nissan Motor Corporate Executive Committee of tor of Warburg Pincus from Company, Ltd., since 2001. Mr. the Managing Board, Siemens AG, a February 1999 until October 2000. Ghosn previously served as chief global electronics and industrial Director of Alcoa since 1994. conglomerate, since January 2004. Served as president and chief execu- tive officer of Siemens Corporation, the U.S. arm of Siemens AG, 2002- 8 Governance Structure and Management Systems

Franklin A. Thomas, 69, consultant, Compensation and Governance and TFF Study Group, a nonprofit Benefits Committee Nominating Committee institution assisting development in Determines compensation for Alcoa Recommends nominees for election South Africa, since 1996; chairman, officers, administers the stock option as directors and has oversight September 11 Fund since 2001; plan, oversees investment manage- responsibility for corporate gover- president and chief executive officer ment of the principal pension and nance, director education and of The Ford Foundation 1979-1996. savings plans, approves any special orientation, and the performance Director of Alcoa since 1977. post-retirement arrangements for evaluation process for directors, the retiring Alcoa officers, and performs committees, and the board. Ernesto Zedillo, 52, director, Yale other functions specified by the Center for the Study of Globalization, Kathryn S. Fuller company’s compensation and benefit since September 2002. Former presi- Sir Ronald Hampel plans. The committee retains dent of Mexico, elected in 1994 and independent compensation consult- John P. Mulroney — Chair served until 2000; held various posi- ants to assist it. The members of tions in the Mexican federal govern- Franklin A. Thomas the Compensation and Benefits ment from late 1987 to his election. Public Issues Committee Committee are independent, as Director of Alcoa since 2002. Provides advice and guidance on defined under the New York Stock public issues, oversees corporate giv- Board Committees Exchange listing standards. Audit Committee ing, makes recommendations to the Carlos Ghosn Reviews Alcoa’s auditing, financial board regarding significant share- reporting, and internal control Joseph T. Gorman — Chair holder issues, and reviews company reporting initiatives regarding social functions and retains the independ- Sir Ronald Hampel and environmental matters. ent auditors. It also reviews the com- John P. Mulroney pany’s environmental, health, and Kathryn S. Fuller Franklin A. Thomas safety audits and monitors compli- Carlos Ghosn ance with Alcoa business conduct Executive Committee Judith M. Gueron — Chair policies. The members of the Audit Acts on behalf of the board when Committee are independent, as specific action must be taken Henry B. Schacht defined under the New York Stock between board meetings. Under the Ernesto Zedillo Exchange listing standards. The by-laws of the company, this com- Independence Standard for independent auditors, the chief mittee is comprised of three or more Alcoa Directors financial officer, the vice president — directors and shall have and exercise Alcoa believes that a strong independ- audit, and the general counsel have the authority of the board in the ent board is critical. A majority of access to the committee without any management of the business and directors must be “independent” other members of management affairs of the company except as under the listing standards of the being present. otherwise limited by law. NYSE as well as the Alcoa board’s Joseph T. Gorman Alain J. P. Belda — Chair own Director Independence Judith M. Gueron Joseph T. Gorman Standards, as determined by the Board of Directors. Board independ- Klaus Kleinfeld Henry B. Schacht ence depends not only on directors’ Henry B. Schacht — Chair Franklin A. Thomas individual relationships, but also on Ernesto Zedillo the board’s overall attitude. Providing objective, independent judgment is at

9 the core of the board’s oversight func- Michael Coleman Mario Longhi tion, and the board’s composition Vice President — ABS and Quality Vice President — Alcoa and should reflect this principle. Since and President, Alcoa Rigid President and CEO, Howmet 1991, Alcoa has had only one inside Packaging Castings director on its board, the chief execu- Denis A. Demblowski Charles D. McLane, Jr. tive officer, except during a brief peri- Assistant General Counsel Vice President and Corporate od during a CEO transition. Today, 10 Controller out of the 11 directors are independ- Ronald D. Dickel ent, and the Audit Committee, the Vice President — Tax Thomas J. Meek Assistant General Counsel Compensation and Benefits Commit- Janet F. Duderstadt tee, and the Governance and Nomi- Assistant Secretary Colleen P. Miller nating Committee are composed Assistant Secretary entirely of independent directors. Franklin L. Feder Vice President — Analysis and L. Richard Milner Officers Planning Vice President — Alcoa and (As of February 20, 2004) President, Alcoa Advanced Veronica M. Hagen Alain J.P. Belda Transportation Systems Vice President — Alcoa and Chief Chairman and Chief Executive Customer Officer Joseph C. Muscari Officer Executive Vice President — Alcoa Brenda A. Hart Robert T. Alexander and Group President, Asia and Latin Assistant Secretary Vice President — Alcoa and America Chairman, Alcoa Fujikura Ltd. Cynthia E. Holloway Judith L. Nocito Assistant Treasurer Ricardo E. Belda Secretary and Senior Counsel Executive Vice President — Alcoa Rudolph P. Huber William J. O’Rourke, Jr. and Group President, Alcoa Europe Vice President — Alcoa Global Vice President — Environment, Business Services and Chief Julie A. Caponi Health & Safety and Audit Information Officer Assistant Controller Dale C. Perdue Barbara S. Jeremiah William F. Christopher Assistant General Counsel Executive Vice President — Executive Vice President — Alcoa Corporate Development A. Hamish Petrie and Group President, Alcoa Vice President — People and Aerospace, Automotive and Richard B. Kelson Communications Commercial Transportation Executive Vice President and Chief Financial Officer Denise H. Kluthe Assistant Controller William E. Leahey, Jr. Executive Vice President — Alcoa and Group President, Alcoa Packaging, Consumer, Construction & Distribution Group

10 Governance Structure and Management Systems

William B. Plummer Executive Compensation and as to future grants, it is being Vice President and Treasurer We believe our compensation proce- eliminated. dures and practices are in line with Russell W. Porter, Jr. We believe these performance-based current corporate governance stan- Vice President and Deputy General designs and practices have served the dards and practices. Our executives Counsel interests of the shareholders well in have an opportunity to increase their the past, and we will review our Lawrence R. Purtell compensation by performing well. designs and practices going forward Executive Vice President and Our total cash compensation targets to ensure that they continue to do so General Counsel; Chief Compliance are established to pay at the median while enabling the company to Officer of our selected markets within each attract and retain the talent neces- country or region. Our stock option Bernt Reitan sary to run this increasingly complex program rewards executives when Vice President — Alcoa and Group global company. President, Primary Products the company stock is rising, but executive compensation declines Responsibility for all aspects of exec- Ricardo B. M. Sayao when the company’s stock price has utive officers’ compensation, includ- Assistant Treasurer declined or when financial and non- ing approval of any officer employ- Richard L. (Jake) Siewert, Jr. financial performance objectives are ment, retention, and severance agree- Vice President — Global not fully realized. We have never ments, lies with the Compensation Communications and Public Strategy repriced stock options, and our plan, and Benefits Committee of the Board which was approved by the share- of Directors. This committee is com- Paul D. Thomas holders in 1999, prohibits repricing. prised solely of independent directors. Vice President — Alcoa and Group President, North American The company is moving away from In September 2003, our Board of Fabricated Products the use of stock options only to a Directors adopted a policy to seek blend of stock options and restricted shareholder approval for any future Kurt R. Waldo stock units. Units at the top manage- severance agreement with any senior Assistant General Counsel ment level will be 100% contingent executive officer of the company Robert G. Wennemer upon company performance as com- when any such agreement would Vice President — Pension Fund pared with that of an external com- result in payments to the officer in Investments and Analysis parator group. In addition, the excess of 2.99 times his or her salary reload feature of the company’s pre- and bonus. This policy resulted from John M. Wilson vious option grants is being limited; Board of Director discussions that Vice President and Deputy General began following the April 2003 Counsel annual shareholders’ meeting, at Russell C. Wisor which a majority of the shareholders Vice President — Government who cast votes (although not a Affairs majority of shares outstanding) Mohammad A. Zaidi Vice President and Chief Technical Officer

11 approved a resolution requesting that Independent Auditors Internal Audit the Board consider such a policy. Over the last several years, Alcoa Alcoa has long had an independent, has significantly reduced its ratio of global Internal Audit Department Even prior to the Board’s response to non-audit to audit fees. In 2003, (IAD). The vice president — audit the shareholder vote, it had been audit and audit-related fees totaled meets privately with the Audit Alcoa’s longstanding practice and pol- $9.1 million, while fees related to Committee at least four times per icy that any severance agreement with tax services totaled $4.8 million and year. a senior executive officer required non-audit-related fees were $0. Over approval by the Compensation and The IAD is responsible for provid- the last three years, total non-audit- Benefits Committee of the Board of ing financial, information technolo- related fees were $0, reflecting the Directors. It should also be noted that gy, environmental, and health and company’s desire to limit the scope severance agreements approved by safety audits in all Alcoa locations of the independent auditor to audit the Compensation and Benefits across the world. The group’s focus and tax work only. Committee prior to adoption of the is to assess risk across the company, policy had not resulted in cash pay- In accordance with resolutions adopt- apply audit resources to address ments or negotiated benefits that ed by the Audit Committee, the lead those risks, and develop recommen- exceeded the 2.99 limit in the policy. audit and review partners of the inde- dations to close any gaps that are pendent auditor will be rotated at detected as a result of an audit. IAD Audit Process least every five years. is also charged with implementing Our goal is the same through both the Alcoa Self Assessment Tool, a our internal and external audit type of self-audit that is required to processes: to maintain world-class be performed at least once every 18 transparency and accountability in months by every Alcoa location and Alcoa operations. administrative process worldwide.

Alumar Ranked Best in World Every three years, BHPBilliton conducts a tion of community activities with envi- for Health, Safety, peer review process at each of its facilities. ronment, health, and safety. Audit teams are drawn from operations Environment, and Community Alcoa also conducts an extensive inter- personnel, line management, and external nal audit on each location at least every Following an extensive 2003 health, sources. The formal audit results in the safety, environment, and community development of performance improvement three to four years. The audit team con- audit by consortium partner plans that help a facility come into full sists of Alcoa employees from the com- BHPBilliton, the Alcoa-managed compliance with BHPBilliton’s 15 compre- pany’s internal audit department as well Alumar refinery and smelter in São hensive standards. as employees from other locations or Luis, Brazil, was ranked the best business units who have special skills among 55 locations around the world Following its 2003 audit, Alumar posted an needed for a particular audit. The team audited by BHPBilliton. overall score of 4.3 on a five-point scale. spends an average of three to five days The average for sites already audited by at a location to verify it is meeting Alcoa’s The Alumar refinery is owned by con- BHPBilliton was 3.4, making Alumar the minimum expectations in the disciplines sortium partners BHPBilliton (36%), highest ranked of all plants. In addition, of environment, health, and safety. Alcoa Aluminio do Brasil S.A. (35.1%), the facility’s occupational health, industri- Abalco S.A (18.9%), and Alcan S.A. al hygiene, and industrial wastes man- During Alumar’s last Alcoa audit in (10%). The smelter is owned by Alcoa agement programs ranked the best ever 2002, the facility received the highest Aluminio do Brasil S.A. (53.66%) and audited by BHPBilliton. Areas identified rating possible for its environmental BHPBilliton (46.34%). for improvement included better integra- 12 performance. Governance Structure and Management Systems

Ethics and Compliance We also began quarterly distribution The compliance line is available to Program of materials dealing with business Alcoa employees worldwide, with Alcoa’s Ethics and Compliance ethics and proper conduct to all the local toll-free compliance lines Program is designed to ensure that Alcoa locations with the objective of answered in the caller’s native all Alcoa employees understand and maintaining and further developing language. In 2003, we added an fully comply with the letter and overall employee awareness of ethics and compliance e-mail address spirit of the company’s business current ethics and compliance topics. (anonymous, if desired) and a postal conduct policies and guidelines. To mail address for submission of Lastly, in conjunction with the provi- help them do this, the program written inquiries. sions of the U.S. Sarbanes-Oxley includes globally published work- Law, we have developed and Shareholder Engagement place standards and behavior expec- deployed a financial investigation tations, an inclusive education Alcoa has a dedicated shareholder process under the leadership of program to put them into practice, relations group that engages with Alcoa’s chief compliance officer. The and a worldwide network of Ethics both institutional and individual existence of this process will ensure and Compliance Lines. These tools shareholders to hear their concerns consistent handling, proper commu- are available to Alcoa employees throughout the year. The group facil- nication, thorough investigation, and worldwide in 18 languages. itates discussion with management timely action in the event issues about the strategy and tactics of the We added three components to this relating to accounting, internal company along with emerging corpo- program in 2003. First, we deployed accounting controls, or auditing rate governance issues and the com- mandatory, job-specific, web-based matters are brought to the attention pany’s corporate governance policies. ethics and compliance training to of management. approximately 10,000 employees. Shareholder engagement occurs at The Compliance Advisory Council, In addition to corporate officers and quarterly analyst workshops, the made up of the chief executive business unit leaders, employees annual shareholder meeting, individ- officer, chief financial officer, general selected to participate in this initial ual and group meetings with institu- counsel, director of global compli- wave of online training were general- tional shareholders on a monthly ance, and director of ethics and ly those who negotiate with cus- basis, global investor conferences compliance, continues to meet on a tomers and suppliers, can contractu- (usually one per year), and via regular basis to review program ally commit the company, or have phone, e-mail, and in-person contact. effectiveness, assess strategic direc- access to confidential information. Shareholders also elect the members tion, and provide tactical support This training program will be of the Board of Directors, and for this process. expanded in 2004. Alcoa’s Governance and Nominating Ethics and Compliance Line Committee considers any share- Our global Ethics and Compliance holder recommendations for director Line provides employees and other nominees. concerned parties an anonymous channel for asking questions, expressing concerns, and raising issues about workplace activities and business practices.

13 STAKEHOLDER Stakeholder Consultation ● Safeguarding what we have pre- ENGAGEMENT Outcomes specified with built-in tests to iden- Some examples of the type of infor- tify and prevent problems that Stakeholder Identification mation and initiatives that result might threaten our predetermined A stakeholder is defined as any from stakeholder engagements are outcomes. group or individual affected by contained throughout this report via Alcoa’s operations or that has the ● Enabling every Alcoan to recognize case studies. capacity to influence our operations and trace problems back to their or future prospects. root cause and eliminate them; not OVERARCHING POLICIES through the use of elite, discrete Stakeholder Consultation AND MANAGEMENT teams of problem solvers, but Alcoa has deployed a community SYSTEMS through the disciplined, immedi- framework through which each Alcoa Business System ate, relentless participation of the operating location is expected to Alcoa’s overarching operating system people occupying the affected engage the local community in the is known as the Alcoa Business pathway. most appropriate means for that System (ABS). It is characterized by community. These include forums, This system provides the most effi- three overarching principles: make to workshops, advisory panels, pub- cient way for eliminating waste by use; eliminate waste; and people lished reports, projects, and open enabling us to supply customers, on linchpin the system. houses. demand, with defect-free products at In practice, this means: the lowest cost and with the highest degree of safety. ● Defining precisely our customers’ requirements.

● Pre-specifying the activities, the pathways, and the connections necessary for meeting those cus- tomer requirements and refusing to vary from them.

A Personal Look at I am pleased with the amount of input the region, has risen, because I now Community Consultation community representatives have had iden- believe that the company genuinely tifying issues relevant to both our local listens to community concerns and a Community members near Alcoa’s community and to Portland Aluminium. process has been developed that Victorian mining and smelting facilities allows this to work in a non-intimidating in Australia actively participate in the I am even further pleased that the issues environment. development of the facilities’ raised during the EIP process by the com- Environmental Improvement Plans munity representatives at the open EIP In my two-year involvement, I have also (EIPs) and add their signatures to the meetings, where senior smelter staff and witnessed the words of the EIP plan finalized plans. Andrew Govanstone, managers participate, have been viewed become actions. Of course, there have Portland community member, conveys seriously by Portland Aluminium and have been occasions when issues raised his experience with the process. been “taken on” by smelter staff. Instead needed to be further explored and of lip service, I have seen the matters sometimes wrestled with, but where When I put my hand up to be a com- raised incorporated into the EIP for all to changes were identified as necessary, munity participant in the Portland read, and the sign-off process has consoli- they have either been made or are Aluminium EIP process, I was slightly dated everyone’s understandings, commit- being phased in as circumstances allow. skeptical of the potential outcomes. ments and proposed actions into black Overall, I have found the process per- and white on paper. But after having participated in the sonally interesting, satisfying, and process for two years now, I am pleased My confidence in Portland Aluminium, worthwhile; and I am pleased that I with our achievements on several fronts. as a large company operating in my became involved. 14 Governance Structure and Management Systems

External Principles and Market Development Group. We locations actively working toward Initiatives choose memberships where we can certification within two years. We Alcoa subscribes to or endorses the see a significant role for business in are also currently pursuing a corpo- following externally developed prin- advancing sustainability. rate-wide certification to the ciples or initiatives. ISO14001 EMS Standard. Programs and Procedures ● The Business Roundtable Some examples of Alcoa’s programs All of our locations are required to Principles of Corporate and procedures pertaining to eco- have written environmental manage- Governance nomic, environmental, and social ment systems based on the continu- ● International Aluminum Institute performance are contained through- ous improvement principle — which Sustainability Principles out this report via case studies. is the major thrust of the ISO Standard and is aligned with the ● International Council on Mining Certification Status principles of Alcoa Business System & Metals Principles As of December 31, 2003, Alcoa had — but certification is not required. 152 locations certified to the ISO Memberships 14001 Environmental Management We have four locations that are certi- Alcoa is a member of numerous Systems (EMS) Standard, with 154 fied to the Occupational Health and organizations. These include major Safety Management System standard aluminum associations and metal (OHSAS 18001). They are Poços de councils throughout the world and Caldas, São Luis, AFL do Brasil, and organizations like the Business Tubarão Extrusions — all Roundtable, the Pew Center on Aluminio/Latin America locations. Global Climate Change, the World Business Council for Sustainable Development, and the World Resources Institute Green Power

Helping NGOs Become More ● Corporate citizenship and the increas- ● How NGOs can partner with corpora- Viable and Sustainable ing expectations that stakeholders tions to improve local communities. have for organizations in the communi- In the past several years, two conflict- Follow-up surveys showed that nearly ty, and how that affects philanthropy. ing forces have converged to drive all participants learned new skills and change in the nonprofit world: an ever- ● How funders assess an NGO to deter- ideas that they could use in their organ- increasing need for services combined mine the potential effects of a grant. izations immediately. In fact, 38.5% of with a decline in availability of public survey respondents made changes in ● How NGOs can conduct an audit of and private funds. This paradoxical either their organizations or how they their organizations to identify strengths, environment means philanthropic non- do work as a result of attending the weaknesses, community need, staff governmental organizations (NGOs) workshop. More than half have already and board viability, and overall health of need to learn new ways to operate and seen success with these changes. the organization; and how they should partner in order to thrive. use the audit results to develop a The surveys also revealed that 88% of Through a series of workshops with roadmap for change. participants were interested in learning experts in NGO sustainability and more about fiscal sustainability, 82.5% ● Collaboration with other NGOs and effectiveness, Alcoa Foundation has for social enterprise, and 72.4% for community partners to maximize com- helped more than 450 leaders from board governance. Alcoa Foundation is munity impact. community-based NGOs in seven continuing to integrate new relevant Alcoa communities in the United ● What NGOs should do to become topics into these workshops and plans States and Jamaica. Participants more relevant to community need. to conduct additional sessions at other 15 learned about the following: Alcoa locations in 2004. Environmental Performance Indicators

MATERIAL USE als. In general, approximately two growth of Alcoa, our processes are metric tons of bauxite are required to generally among the most efficient in Total Materials Use produce a metric ton of aluminum the world, with several benchmark We use a variety of raw materials to oxide, and approximately two metric plants in terms of process efficiencies produce semi-finished and finished tons of aluminum oxide will yield one and low emissions. At our major alu- products. Although a significant part metric ton of aluminum metal. minum smelter in Portland, Australia, of our activities are designed to pro- concerted efforts have reduced the duce high-quality aluminum metal, We also use plastic resins, including solid waste disposed of in landfills semi-finished aluminum products for polypropylene, PVC, and polyethyl- from more than a thousand metric manufacturers, and finished products ene, to produce packaging materials, tons per month to less than three for consumers, we also produce a wide transportation applications, and metric tons per month between 1990 variety of products made from plastics. architectural products for home and and 1996. We achieved this through commercial use. Resins have become To produce aluminum, we use baux- pollution prevention, recycling, and an important part of our materials ite, lime, caustic soda, aluminum fluo- reuse programs. The waste-to-landfill supply, and we pay significant atten- ride, carbon, and several other mate- number has remained within 2% to tion to processing and internal scrap rials. The requirements for these 3% of this figure since 1996 through management to ensure that all resins materials depend on the initial quality to 2003, demonstrating the sustain- are used effectively. The amount of of the bauxite and the process tech- ability of these programs. waste associated with plastic use is nologies used to convert the materi- extremely low, with almost no plastic materials going to landfill from our operations. Although the total amount of waste generated in our metals process area has increased as a result of the

Returning Wasteland supervisor for Poços de Caldas. “The rain- underway as well as studies related to to Nature water falling on the area is returned to the bauxite mine rehabilitation methods. environment without the need for treat- “This project is an example other com- What once was a disposal area for ment. We’ve eliminated the use of irriga- panies should follow since it will reduce bauxite residue, a waste generated by tion water to suppress caustic dust, saving the environmental impact of bauxite the aluminum refining process, is now a 130-million liters of fresh water a year. residue,” said Nilton Granato, director 26-hectare (64-acre) rehabilitated area And, we have a supply of caustic soda of Poços de Caldas’ Environmental that supports native Brazilian trees, other heading back to the refinery for reuse.” vegetation, and reemerging animal life. Protection Department. “In terms of The latter brings an economic benefit to what Alcoa could be doing better, I By 1990, the Poços de Caldas refin- the refinery because it previously had to suggest finding ways to recycle bauxite ery’s bauxite residue area #3 reached purchase caustic soda to replace that waste for use in other industries.” its storage capacity of 1.7 million lost in the residue areas. In late 2002, Alcoa signed an agree- metric tons. After numerous studies, Completed in 2001, the area now sup- ment with Brazil’s Ceramics Center to construction began in 2000 to remedi- ports 20,000 native trees, other vegeta- research ways in which bauxite ate the surface of the area according tion, and returning animal life, including residue could be used by the country’s to Alcoa bauxite disposal standards. birds, frogs, and snakes. The reclaimed growing ceramics industry. Research “All of our targets have been achieved,” land is also serving as a natural research began in early 2003 and is expected to said Geraldo Paes, refinery engineering laboratory, with an amphibian survey be completed in 2005. 16 Environmental Performance Indicators

Waste Materials Used chloride materials used in our con- PVC Use We use recycled materials within our struction, automotive, and packag- We produce a variety of polyvinyl operating locations to reduce wastes ing processes. chloride (PVC) films, and an and costs. Scrap aluminum is re- important part of our operation is melted, and scrap plastic materials Aluminum Metal Recovered from the recycling of PVC. Whenever Purchased Scrap are reused when quality and color (thousands of metric tons) possible, we recycle PVC scrap material back into our products. requirements allow. We currently use 2000 712 approximately 20% purchased scrap We are careful to segregate films for the metal supply to support our 2001 7371 that are approved by the U.S. Food businesses, and we have a goal to and Drug Administration (FDA) increase this scrap utilization rate to 2002 768 from those that are not. If there 50% of the aluminum products that is PVC scrap we can’t use, we 2003 696 we make, except for raw ingot that sell that material to recyclers who is sold to others, by 2020. 0 200 400 600 800 can use it. 1Estimated The current aluminum scrap avail- ability limits our opportunities to reach this target, but we anticipate ENERGY that scrap availability will increase due to the rapid growth of aluminum Total Energy Used (percent) applications in the construction, Oil Gas Coal Hydro Grid1 transport, and consumer products 2000 8.2 17.8 24.8 33.8 15.2 2001 8.3 17.0 24.9 32.3 17.4 sectors over the last two decades. 2002 7.2 19.3 26.0 32.4 15.0 Improved scrap collection, sorting, 2003 8.3 15.9 32.5 33.7 9.6 and processing technologies will also Includes all purchased and self-generated electricity plus all fuel used 1 help increase available scrap. Purchased electricity where the source of the power is not fully known We see the benefit in reusing alu- Purchased Electricity Renewable Energy (billions of kilowatt hours) minum to the highest degree possible As we search for stable and long- 2000 55.6 and will strive to achieve this 50% term energy supplies, we are com- recycled aluminum goal as rapidly as 2001 56.7 mitted to decreasing our reliance on possible. We also recycle the polyeth- fossil fuels by increasing, where pos- ylene, polypropylene, and polyvinyl 2002 57.9 sible, our use of natural, renewable energy sources that help us lower 2003 59.6 our carbon dioxide emissions and 02010 30 4050 60 contribute to the efforts to address Please see endnote on page 27 for an explanation global climate change. on data changes from 2002 reporting.

17 Hydro energy has proven to be an We acknowledge the complex eco- Development Group will help us excellent power source for our elec- nomic, social, and environmental achieve this objective. trolytic processes, and we continue interrelationships often associated In 2003, we and other Green Power to seek additional hydro-based with hydropower projects. We also Market Development Group member power. In Brazil, we are involved as agree that open and transparent companies participated in the largest a minority partner in hydroelectric processes, such as those outlined in renewable energy certificate purchase projects, such as the Machadinho the guidelines produced by The to date in the United States. Renew- and Barra Grande dams. We are also World Commission on Dams, are able energy certificates are a new committed to be the principal cus- needed when new hydro projects are type of renewable energy product tomer for a new hydroelectric dam considered. that consumers can buy to reduce in Iceland. We offer a detailed review We are currently pursuing the the environmental impact of their of the Iceland project elsewhere in return of a concession granted to us activities. The certificates represent this report and on alcoa.com. by the Brazilian government as a the environmental attributes or A recent upgrade at one of our partner to build a dam on the avoided emissions when electricity is hydro facilities in the United States Araguaia River called Santa Isabel generated from renewable resources improved the power generation per because the environmental reviews instead of from fossil-fuel sources. cubic meter of water flow through conducted by the agencies involved The certificates we are purchasing the turbine by almost 30%. This determined that the dam would essentially mean that four of our resulted in more efficient use of the have environmental impacts that administrative centers are now oper- water resource — more power with would be unacceptable. ating 100% on electricity generated no increase in water flow through by projects that produce power from We are committed to increasing the turbine. We plan to make similar landfill gas, avoiding the emissions our use of renewable energy beyond improvements in other facilities and of more than 6.3 million kilograms hydropower, and we are exploring believe that this upgraded technolo- (13.9 million pounds) of carbon other energy options, such as wind gy can be used by others to increase dioxide annually. energy. We are confident our contin- hydro efficiency worldwide. ued active involvement and support of the Green Power Market

The Challenge of Hydropower and diversify the Icelandic economy, it has Permit by Iceland’s Environment and in Iceland generated some controversy. Most opposi- Food Agency on March 14, 2003. It is tion has centered on aspects of the hydro currently being designed by a multi- Alcoa’s agreement to build its first pri- project, which is essential for the construc- discipline sustainability team that is mary aluminum facility in more than 20 tion of the smelter. The Icelandic Parliament using extensive local environmental years — in Iceland — is consistent with approved the project in March 2003, with 41 modeling to help guide the incorporation its commitment to renewable energy. As members from a wide range of the political of lessons and technology developed with any new development, one of the spectrum in favor and nine opposed. over the past 20 years. The smelter will challenges lies in ensuring that the operate under the most restrictive The hydro project will change the environ- facility delivers net long-term benefits to ambient air quality standards in the ment, but the project’s Environmental both Alcoa and Iceland’s economic, world and will achieve air quality stan- Impact Assessment — the most compre- social, and environmental structures. dards far better than European and hensive in Iceland’s history — shows that North American ambient air require- Power for the new smelter will be pro- the ecosystem in the glacial highlands ments. Detailed work is also being done vided by a 630-megawatt hydropower near the facility can be protected. by Alcoa and local authorities to plan station being built and operated by the integration of the enterprise into the The smelter, located on the settled east Iceland’s national power company. local community. coast of Iceland near the town of Although the majority of Icelanders sup- Reydarfjordur, will create about 750 jobs. It Extensive discussion of this project port this project because it will strengthen was granted an Environmental Operating can be found on alcoa.com. 18 Environmental Performance Indicators

WATER

Total Process Water Use Total Process Water Use by Region (millions of cubic meters) (millions of cubic meters) Asia Pacific Europe North America South America Total 2000 115.5 2000 15.7 22.3 71.0 6.5 115.5 2001 14.0 22.5 66.0 6.0 108.5 2001 108.5 2002 15.4 21.9 62.2 6.0 105.5 2003 10.7 20.3 61.4 4.7 97.1

2002 105.5 Please see endnote on page 27 for an explanation on data changes from 2002 reporting.

2003 97.1 ing worldwide in a manner which New or expanding operations should

04020 60 80100 120 minimizes impacts on natural habi- document the level of ecosystem and Please see endnote on page 27 for an explanation tats and biological resources. species diversity within their area of on data changes from 2002 reporting. influence by applying techniques, pro- Our operations can play a positive cedures, and information generally BIODIVERSITY role in conserving biodiversity by accepted by the international scientific adopting appropriate land manage- Alcoa’s Position on community. Measures to minimize ment practices and rehabilitating Conservation of Biodiversity adverse impacts on ecologically signif- land disturbed by the operations in Consistent with Alcoa’s environmen- icant ecosystems or species should be an appropriate manner. tal policy and our published position adopted. Particular attention should on sustainable development, we be paid to the conservation of rare actively endorse the concept of con- biological communities and rare, servation of biodiversity by operat- endangered, or threatened species. Where relatively extensive opera- tions, such as bauxite mining, are

Investments Reduce Process from 37,850 liters-per-minute (10,000 Water Discharge by 96% gallons-per-minute) to 1,514 liters-per- minute (400 gallons-per-minute). Through the investment of US$14.6 million in new technologies and Wastewater before (right) and after treatment A separate project created a treatment processes implemented since 1994, at Davenport. facility to remove suspended solids, Alcoa’s Davenport Works in Iowa metals, oils, greases, and other (USA) decreased the amount of water water use and recycle as much water as unwanted chemicals from water divert- it discharges to the Mississippi River possible onsite. ed from the recycle system for dis- by 96% on dry days. charge to the river. One project enabled mill water to be The final project separated the Prior to these projects, the facility dis- pumped back to the facility reservoir to stormwater and process water returns charged an average of 37,850 liters- allow suspended solids to settle out. It for the ingot plant, improved chemical per-minute (10,000 gallons-per-minute) also included major changes to the plant feeds to the ingot water recycle system, of process water to the Mississippi chemical control systems, construction of and created a new stormwater outfall. River. This amount surged in wet water return sumps, changes to pumping weather as it was joined by stormwater capacity at the river intake, new cooling Davenport is currently considering runoff. Faced with these volumes, towers, and several other improvements projects to reduce process discharges Davenport embarked on a series of that reduced the total water discharge further, especially those associated major projects designed to reduce with wet weather. 19 carried out in natural habitats, reha- ued. The rehabilitation process must In addition, our Western Australia bilitation of the disturbed land be monitored and reported, and we mining operation earned the 2003 should in most circumstances favor design metrics to ensure that progress Model Project Award from the the return of the pre-existing vegeta- is made and that our biodiversity Society for Ecological Restoration tion and fauna communities. Such goals will be achieved. Please see International. rehabilitation should aim to re-estab- alcoa.com for our bauxite mine reha- lish the broadest practicable genetic bilitation standards and guidelines. Mining Land Disturbed/Land base using local genetic material and ■ Area Disturbed (annual) Our mines have been recognized for Rehabilitated ■ Area Rehabilitated (annual) provenances wherever possible. (hectares) Open Mine Area (cumulative) outstanding reclamation in Brazil, 0 2,000 4,000 6,000 8,000 10,000 Mining Reclamation Process Jamaica, the United States, and 995 2000 7,626 Alcoa has a strict set of mine recla- Australia. For example, the Squaw 1,172 861 mation standards that require mine Creek Mine (coal) in the United 2001 7,177 1,310 States earned the 2002 Indiana planning to fully incorporate recla- 974 2002 7,318 mation and biodiversity into the pro- Excellence in Mining and 834 1,221 gram. Mine activities must be Reclamation Award from the 2003 7,002 824 designed to prevent erosion, segre- Indiana Department of Natural 0 400 800 1,2001,600 2,000 gate topsoil where feasible, make use Resources, Division of Reclamation. Area disturbed means annual land used in each of native seeds where possible, utilize reported year for mining or for mining infrastructure (roads, shops, crushing equipment, conveyors). native species for reclamation, and Area rehabilitated means annual land returned to nature or to productive use (such as farming) after restore the area in a way that allows mining in each reported year. Open mine area is the cumulative area of land that has not been rehabilitated the previous land use to be contin- (including active mines and land used for mining infrastructure). One hectare equals 2.5 acres. South American numbers for 2003 exclude rehabilita- tion at the Paranam area, where current mining operations are run by BHPBilliton. South American data reported for other years have remained unchanged and include the Paranam area. Jamaican data include areas from the Breadnut Valley and Harmon Valley mines. Harmon Valley mine is a joint venture that is not operated by Jamalco.

Alcoa Frog Watch our reason for changing the environ- Alcoa Frog Watch member Vivien Elanta in ment. Most people can’t see or hear Frogs are sensitive environmental her garden, which features a frog pond. toxins, but they can see and hear barometers, thriving when conditions frogs. That’s why they are such good are clean and declining in numbers Alcoa Frog Watch solicits frog-monitoring vehicles to get people involved in when contaminants, parasites and assistance and raises awareness through cleaning up the environment.” other factors are introduced into their community and school presentations, dis- habitats. Because it’s easy to hear if plays, workshops, internet sites, media Although frog populations continue to frogs are present, they become audible coverage, and ongoing communications. decline, some areas where the Alcoa indicators of environmental conditions. The program encourages participants to Frog Watch program is strong see this help conserve frog life in their areas, from trend being reversed. In 1994, Alcoa partnered with the building frog habitats to regularly monitor- Western Australian Museum to create a “Alcoa’s involvement and support has ing frog populations in their backyards community frog monitoring and conser- allowed us to expand our reach and and ensuring local landcare projects vation program. Called Alcoa Frog contact with the community,” said encourage frog populations. Watch, the program expanded to Marantelli. “Prior to the Alcoa’s involve- Victoria in 2002 through a partnership “Our declining frog population is telling us ment, we were struggling to educate with the Amphibian Research Centre. that our environment is degrading,” said Australians that frogs are a very good Due to the program’s activities, more Gerry Marantelli, manager of the vehicle for environmental manage- than 30,000 people are actively Amphibian Research Centre in Victoria, ment. In protecting frogs, we’re pro- 20 involved in frog monitoring and conser- Australia. “We can alter these degrading tecting everything else that shares vation initiatives throughout Australia. effects and use frogs as our monitors and their habitat.” Environmental Performance Indicators

Open Mine Area (hectares) EMISSIONS, EFFLUENTS, Asia Pacific Europe/Africa North America South America Total AND WASTE 2000 2,870 1,084 1,179 2,493 7,626 2001 2,489 1,192 1,031 2,465 7,177 The Alcoa Business System recog- 2002 2,404 1,359 1,077 2,478 7,318 nizes that all wastes are costs. We 2003 2,549 1,564 955 1,935 7,002 are focused on waste reduction as a Cumulative figures. One hectare equals 2.5 acres. way to improve our processes, reduce costs, and reduce our envi- Area Disturbed for Mining (hectares) ronmental impacts. Asia Pacific Europe/Africa North America South America Total 2000 598 109 205 83 995 Over the last 20 years, Alcoa 2001 548 108 152 53 861 locations have made significant 2002 527 178 185 85 974 2003 641 248 243 89 1,221 progress. Some smelters have

Annual figures. One hectare equals 2.5 acres. reduced fluoride emissions by more than half, using improved operating Area Rehabilitated (hectares) practices, dual volume exhaust Asia Pacific Europe/Africa North America South America Total systems, and equipment upgrades. 2000 704 0 410 58 1,172 Significant gains have been made in 2001 929 0 301 80 1,310 2002 612 11 138 73 834 extending the effective life of 2003 431 43 236 113 824

Annual figures. One hectare equals 2.5 acres.

Wetlands Project Engages In addition to expanding the wetlands, Newly created wetlands and black the project’s design increased and diver- Community ash stand. sified area wildlife and created educa- Expansion of existing wetlands at tional and recreational opportunities. Alcoa’s Massena East Plant in New Mohawk Community. Once matured, York (USA) resulted in more than an Commissioned in 2003, the wetlands the Alcoa black ash plot will be among enhanced environmental outcome. The include a public viewing area that the largest stands of such trees ever local community did not lose valuable encourages visitors to observe the wet- planted and will provide the tribe with tax-producing land since the wetlands lands and the life they hold. In this area, material for basket-making and medici- were contained within the Alcoa prop- 250 artificial nest sites are beginning to nal purposes. attract bats and such varied bird species erty, and a local Native American tribe “This is a model for what can be accom- gained new resources from the pro- as ducks, screech owls, bluebirds, wood- plished when a corporation listens and ject’s tree-planting activities. peckers, great blue herons, and ospreys. understands the true needs of its neigh- The project began to mitigate lingering In 2003, Alcoa and local community bors,” said Les Benedict, assistant direc- effects in the area’s wetlands from groups planted 4,000 black ash and tor of the St. Regis Mohawk Tribe Alcoa’s site remediation efforts, which 3,000 companion species in the wetlands Environmental Division. “It is also a lasted between 1991 and 2001 and to celebrate Alcoa’s successful One model for working with Native Americans addressed 18 inactive hazardous Million Trees program. The plant selected on a level that probably hasn’t ever been waste sites on 48.2 hectares (119 the black ash because of its major cultur- done before, and it will add to the knowl- acres) at the Massena West Plant. al importance to the nearby Akwesasne edge base for black ash restoration.” 21 1 smelting pot lining, thereby Direct Greenhouse Gas Emissions (million metric tons of CO2 equivalents — CO2 e)

reducing the amount of spent pot Direct CO2 PFCs SF6 Total lining that must be managed. 1990 32.0 17.0 2.2 51.2 2000 33.2 7.4 1.1 41.7 Greenhouse gas emissions associated 2001 32.6 4.2 0.7 37.5 with smelting pot operations have 2002 32.4 4.6 0.0 37.0 been reduced by more than 75% at 2003 33.6 4.0 0.0 37.6 many locations, and water discharge 1Direct GHG emissions are the emissions from the facilities where Alcoa has at least a 50% ownership and/or management control. Please see endnote on page 27 for an explanation on data changes from 2002 reporting. has been reduced by 80% at several large facilities. Landfilled waste also Indirect Greenhouse Gas Emissions Ozone-depleting Substances has been reduced significantly at Associated with Purchased Electricity Alcoa has eliminated ozone- (million metric tons of CO2 ) many locations. depleting substances from process Indirect CO2 We have identified significant energy 1990 21.4 operations. In newly acquired savings opportunities (currently 2000 23.2 facilities, elimination of these sub- 2001 24.8 stances becomes a high priority. We more than US$59 million), and we 2002 24.0 have captured over US$16 million 2003 25.2 do continue to use halon gas as a fire suppressant in 71 sensitive loca- per year in these energy savings to Indirect CO2 data were impacted by using updated local emissions factors for purchased electricity in accordance date. We have planned more work in with the WRI/WBCSD GHG Protocol. tions throughout the world, and the next few years, with over $50 these systems will continue to be million in annual energy cost reduc- phased out. There was one release tions expected by 2007. from a halon system at an Alcoa location in 2002, but none in 2003.

Moving Beyond Current Alcoa’s strategy team, which meets sever- The climate strategy team also Reduction Targets for al times a year, also reviewed progress on emphasized the importance of a world- Greenhouse Gases Alcoa’s greenhouse gas inventory man- wide database of greenhouse gases agement systems. In 2004, Alcoa’s current and compatible reporting protocols for Alcoa’s Climate Change Strategy team, global greenhouse gas tracking program all governments and reviewed Alcoa’s a group of 15 experts on climate issues will be directly linked to a new greenhouse role in these protocols. These include based at Alcoa locations around the gas information system for Alcoa Primary protocols developed by the World world, is responsible for reviewing how Products. The Primary Products green- Resources Institute, World Business Alcoa’s programs and products are part house gas information system estimates Council for Sustainable Development, of the solution to climate change. greenhouse gas emissions from 40 major and the government of Quebec as well In late 2003, the team reviewed facilities consistent with established proto- as those being developed by the progress on cutting emissions and cols. The system is integrated with produc- International Organization for started working on plans and programs tion databases to provide monthly feed- Standardization, Climate Leaders, the for meeting and maintaining the com- back on emission reduction performance U.S. Department of Energy, and pany’s current 2010 goal of a 25% at each location. These system improve- others. Alcoa is also a participant in reduction from 1990 levels for green- ments will allow for more active manage- the World Economic Forum’s Global house gases — a target that has been ment of greenhouse gas emissions and Greenhouse Gas Register. met by Alcoa locations. more real-time communications within the company on progress and opportunities. 22 Environmental Performance Indicators

SO2 Emissions SO2 Emissions by Region (thousands of metric tons) (thousands of metric tons) Asia Pacific Europe North America1 South America Total 2000 302.8 2000 43.6 19.5 226.2 13.4 302.8 2001 44.5 19.6 210.2 12.2 286.5 2001 286.5 2002 50.2 21.0 192.6 12.9 276.7 2003 48.1 15.5 211.9 13.6 289.1

2002 276.7 1Alcoa operates two large coal-fired power plants in the United States. Please see endnote on page 27 for an explanation on data changes from 2002 reporting.

2003 289.1

0 100 200 300 400 Please see endnote on page 27 for an explanation on data changes from 2002 reporting.

NOx Emissions (thousands of metric tons) NOx Emissions by Region (thousands of metric tons)

2000 67.1 Asia Pacific Europe North America South America Total 2000 10.2 2.6 52.1 2.2 67.1 2001 59.1 2001 9.4 2.7 49.7 2.2 59.1 2002 6.8 2.4 43.1 2.2 52.2 2003 8.9 2.5 40.3 2.2 53.9 2002 52.2 Please see endnote on page 27 for an explanation on data changes from 2002 reporting.

2003 53.9

02040 60 80 Please see endnote on page 27 for an explanation on data changes from 2002 reporting.

VOC Emissions VOC Emissions by Region (thousands of metric tons) (thousands of metric tons) Asia Pacific Europe North America South America Total 2000 19.1 2000 1.5 2.5 14.8 0.3 19.1 2001 1.4 1.8 12.1 0.8 16.1 2001 16.1 2002 1.5 1.8 12.1 0.7 16.1 2003 1.3 1.9 10.0 0.5 13.7

2002 16.1 Please see endnote on page 27 for an explanation on data changes from 2002 reporting.

2003 13.7

0510 15 20 Please see endnote on page 27 for an explanation on data changes from 2002 reporting.

Mercury Emissions Mercury Emissions by Region (thousands of kilograms) (thousands of kilograms) Asia Pacific Europe North America South America Total 2000 3.98 2000 0.64 0.38 2.59 0.37 3.98 2001 1.06 0.44 1.39 0.46 3.35 2001 3.35 2002 0.93 0.26 1.46 0.45 3.11 2003 0.98 0.45 1.54 0.48 3.46

2002 3.11 Please see endnote on page 27 for an explanation on data changes from 2002 reporting.

2003 3.46

01234 Please see endnote on page 27 for an explanation on data changes from 2002 reporting. 23 Fluoride Emissions Spent Pot Lining Total Wastes Landfilled (kilograms per metric ton of aluminum produced) per Ton of Aluminum Produced (thousands of metric tons) 2000 0.95 (kilograms per metric ton) 2000 990.2 2000 20.67 2001 0.92 2001 562.6 2001 21.85 2002 0.89 2002 560.0 2002 23.09 2003 0.84 2003 551.6 2003 20.801 0 0.2 0.4 0.6 0.8 1.0 0 250 500 750 1,000 0155 10 20 25 Please see endnote on page 27 for an explanation on data changes from 2002 reporting. Total Wastes Generated 1Estimate (millions of metric tons) Alcoa’s cell life continues to increase, resulting in fewer cell failures and fewer cells that need the Total Wastes Sold or Recycled 2000 1.79 lining removed and replaced. This pollution prevention effort reduces operating costs and will (thousands of metric tons) result in less spent pot lining for disposal. However, since the proportion of Pechiney-design cells has 2000 879 2001 1.93 increased through the acquisition of a number of plants that use this technology, the actual weight of SPL continued to increase even as the number of 2001 986 2002 1.88 cell failures decreased. (Pechiney cells use more insulation than Alcoa-designed cells.) This trend has reversed since the proportion of heavily insulated cells in the Alcoa system has not increased since 2002 1,025 2003 1.70 2000. Alcoa’s efforts to extend cell life have been very successful and are expected to continue to 0 0.5 1.0 1.5 2.0 2.5 result in significant improvements in cell life and 2003 1,388 reductions in the amount of SPL that will be generated. Please see endnote on page 27 for an explanation For example, Alcoa locations experienced 1,548 cell on data changes from 2002 reporting. lining failures in 2002. In 2003, the number of failures 0 500 1000 1,500 was reduced to 1,463. Please see endnote on page 27 for an explanation on data changes from 2002 reporting.

Production Up, Emissions of the smelter’s fluoride emissions during pot-tending operations to better Down in Smelter Project released through potroom roof vents. capture the fumes at the source. The The goal was to protect the vegetation general exhaust rate per pot was also An emissions reduction project at within the smelter’s buffer zone and increased to ensure minimal emissions Alcoa’s Deschambault smelter in prepare for an upcoming amperage at all times. Canada underscored the feasibility of increase and eventual plant expansion. what may seem a contradictory In conjunction with streamlined work sustainability achievement — increase Between September 2001 and August practices and high levels of commit- the facility’s future production capacity 2002, the smelter installed additional ment to emissions reduction among pot filters. These adsorptive alumina-based while concurrently decreasing its room operators, the system became systems capture emitted fluoride — an operational on schedule in September environmental effects. This proved a expensive and essential raw material — 2002. Initial results demonstrated that challenge since the facility was already and recycle it back into the smelting pots. the targeted 50% reduction in fluoride among the best performing smelters in Also installed concurrently with the filters emissions through roof vents was the world. were three kilometers (1.9 miles) of new achievable. From start-up to September In 2000, a team began studying ductwork, two stacks, and other peripher- 2003, emissions decreased by 52% options to reduce by 50% the intensity al items. These items and the dual- compared to the same period in 2000. exhaust system were necessary to increase the ventilation rate at the pots

24 Environmental Performance Indicators

Total Wastes Landfilled by Region (thousands of metric tons) Aluminum Institute has reported Asia Pacific Europe North America South America Total that each kilogram of aluminum on 2000 165.3 132.7 667.2 24.9 990.2 average used in the construction of 2001 65.3 84.0 387.5 25.8 562.6 2002 53.5 83.1 397.6 25.8 560.0 an automobile has the potential to 2003 98.6 72.9 353.0 27.1 551.6 save 20 kilograms of greenhouse gas

Does not include bauxite residue. emissions over the life of the car. Please see endnote on page 27 for an explanation on data changes from 2002 reporting. Aluminum-intensive vehicles not only perform better and consume Discharges to Water as high as 66%, but now stands near less fuel, they also offer improved Alcoa’s wastewater discharges are 50%. Of the 100 billion cans sold safety over comparable steel vehicles relatively small with the exception of each year in the United States, more because of the superior strength and once-through cooling water dis- than 50 billion are collected and re- energy-absorption capabilities of alu- charges, which are extensive. The melted to make new cans. minum automotive alloys. levels (concentrations) of specific pol- It is estimated that the recycling lutants in specific water discharges The formability and strength of the rates for automotive components are important locally, and they are metal make it efficient for a wide approaches 90%, and the rate for carefully managed and monitored. array of applications. These include aluminum in construction applica- food and beverage packages that are tions is recycled at about 85%. Recycling Rates for Products more effective, lighter to ship, and Aluminum is recycled extensively. easier to recycle. Demand for this Recycling rates for aluminum cans PRODUCTS AND SERVICES packaging is growing worldwide, exceed 80% in many countries, Significant Environmental with Europe posting a 7% annual including Brazil, Switzerland, Japan, Impacts of Principal Products growth rate for aluminum cans.1 and Sweden. In the United States, the and Services Other aluminum applications include aluminum can recycling rate has been Aluminum stands out as one of the architectural products that require most valuable materials for creating less maintenance and are strong, and maintaining a sustainable world. For example, the International

Recycling the Previously brake products from Alcoa extrusion “Increasing recycling is a priority of Unrecyclable plants in Spain as well as scrap pulled our regional government and in from old buildings throughout Spain and agreement with the environmental A highly efficient Alcoa recycling plant Portugal. Its emission processing policy of the European Union,” said in Avilés, Spain, handles aluminum system, unique to Europe, prevents the Dr. Herminio Sastre Andrés, former products previously unrecyclable due release of volatile organic compounds head of the environmental department to environmental concerns caused by (VOCs) to the atmosphere from the of the Principado de Asturias. “The the burn-off of paints and lacquers. painted scrap. Alcoa recycling plant contributes to reducing the energy and raw materials Opened in 2001 with a remelting The facility, which requires only one consumption in an industrial sector capacity of 46,000 metric tons per person to operate, uses a furnace that with a great environmental impact.” year, the plant remelts painted and consumes one-third the gas of a conven- lacquered aluminum scrap and thermal tional furnace. This furnace handles a The plant received ISO-14001 certifica- significant portion of the available scrap tion in 2002. in the country and has made it possible for scrap previously sent outside Spain to be used internally to meet that country’s rapidly growing demand.

25 durable, and corrosion resistant; and critical issue for aluminum producers ENVIRONMENT, HEALTH, aerospace components that result in such as Alcoa. AND SAFETY COMPLIANCE safe, reliable, and affordable air and Recycling aluminum saves 95% of Compliance with all the laws and spacecraft. Compounds of aluminum the energy it would take to make regulations in every location where also find uses in improving human new metal from ore, and it lessens we operate is a requirement for us, health and hygiene. the need for solid waste disposal. but we do not use compliance as our Manufacturing primary aluminum The metal is almost endlessly recy- target. Our Values lead us to aspire from raw materials is energy inten- clable, with about two-thirds of the to be beyond compliance and do sive. On average around the world, aluminum ever produced still in use. what is right for society — today it takes some 15.7 kilowatt hours of This equals about 480 million metric and tomorrow. In many instances, electricity-enough to light 150 one- tons of a total 690 million metric we are performing beyond compli- hundred-watt light bulbs for an tons manufactured since 1886. ance and leading the establishment hour-to produce one kilogram (2.2 of new, higher standards. In the 1European Aluminium Association 2 event that performance falls short of pounds) of aluminum from alumina . 2http://www.world-aluminium.org/production/ This means energy conservation is a smelting/index.html our goals, we initiate rigorous review and corrective processes. We track Aluminum Can Recycling Rate (percent) our progress by calculating the rate 100 of environmental incidents1 per loca- Western Europe United Kingdom tion per year. 80 United States Australia 1An incident is any unpredicted event with 60 capacity to harm human health, the environ- ment, or physical property. Some incidents can 40 lead to an imposition of fines and penalties by various EHS regulatory bodies. 20

0 1990 1995 2000 2001 2002 Aluminum industry estimates; 2003 data not available. Australia data from Aluminum Can Group.

Customer Need Drives Tetra Pak had been implementing alterna- would have difficulty finding other work. Brazilian Recycling Solution tives for post-consumption recycling of its Alcoa’s involvement in the Tetra Pak aseptic packaging for some time. This project stems from the company’s In 2003, Alcoa signed an agreement effort received more emphasis in recent customer focus and long-term strategy with three other companies to develop years due to the company’s voluntary to eliminate waste and increase the a technologically advanced recycling global commitment to constantly increase recycling of aluminum. plant to recover aluminum from post- recycling of its packaging. The new plant The recycling plant will be located at a consumer aseptic packaging from should increase by up to 30% the value facility owned by project partner Klabin, customer Tetra Pak. Aseptic packaging of aseptic cartons in the recycling market. is sterilized packaging used to protect a US$1 billion Brazilian pulp and paper and extend the shelf life of foods and “By doing this project, we hope to company. With annual capacity of beverages. encourage sorting centers to collect the 8,000 metric tons, the facility will use material, making the Tetra Pak packages an innovative plasma reactor that will In addition to funding 25% of the plant’s very good business for everyone,” said transform Tetra Pak’s foil packaging US$3.5 million cost, Alcoa has commit- Fernando von Zuben, environmental (75% paper, 20% polyethylene, and 5% ted to purchasing 100% of the recycled, director for Tetra Pak. aluminum) into highly pure aluminum high quality aluminum for use in Tetra and paraffin, which also can be sold. Pak’s foil packaging. Improved recy- Recycling is a very important within cling rates and additional employment Brazil’s economic and social fabric since The plant is expected to be operational opportunities will flow from the project. it employs thousands of people who in 2004. 26 Environmental Performance Indicators

Environmental Incident Rate In the case of large expenditures, such

Spills Over Spills Over Environmental Incident Rate as the new aluminum reduction plant 20 Liters 2,000 Liters1 per Location per Year planned for East Iceland, a sustainabil- 2000 1,038 Not available 9.3 2001 1,146 Not available 8.0 ity team has been formed and is devel- 2002 1,219 96 8.1 oping extensive recommendations on 2 2 2 2003 959 51 7.6 environmental, health, safety, social, 1Spills over 2,000 liters are classified as major incidents in the Alcoa Environmental Incident Management System. The requirements to report major environmental incidents began in 2002, the first year the data were available. and community issues associated with 2As of December 31, 2003. Improved assessments and administrative processes can result in the number of spills and the environ- the new facility. The design team, with mental incident rate increasing or decreasing in subsequent years, as they have for the previous years reported on this chart. Alcoa requires any spill of oils or other liquids in excess of 20 liters to be reported internally as an incident — whether or not they input from a number of outside are contained within our facilities, and whether or not they are required to be reported to external agencies. The environmental incident rate includes all categories of incidents reported into the Alcoa Environmental Incident Management System. resources that include Icelandic archi- tectural firm TBL and Carnegie Mellon CAPITAL EXPENDITURES Capital Expenditures Process University’s Center for Building Environmental Capital Expenditures Alcoa has established a review process Performance and Diagnostics, is now (millions of US dollars) to evaluate all capital expenditures for working to incorporate the recommen- 2000 96 environment, health, and safety to dations into the plant. This work will ensure that the appropriate level of continue throughout the construction 2001 80 attention is being directed to these areas. period in the lead up to operations.

2002 115 A multidisciplinary team reviews plans at an early stage and assists the loca- Endnote 2003 37 tions in risk evaluations and technolo- Alcoa’s Environmental Metrics System 08020 40 60 100 120 gy transfer. Learnings from Alcoa is a dynamic reporting tool that allows locations to update their data as more Capital expenditure for environmental purposes in the locations throughout the world are period 2000-2002 reflects the upgrading of environ- complete information becomes available. mental standards at facilities of newly acquired quickly applied to similar situations companies — Reynolds (2000), Cordant (2001), Ivex Modifications to data prior to 2003 (2002), and Fairchild (2002). Concurrently, significant through this review process. expenditures also occurred as a result of bringing reflect an improvement in data quality as aluminum smelters to new regulatory standards in the United States. Spending in 2003 is reflective of the locations revise their data measurement success in previous years to upgrade acquired loca- techniques in accordance with Alcoa tions to Alcoa standards as well as a greater emphasis on non-capital solutions to environmental issues standards and guidelines for reporting, through the use of the Alcoa Business System, which engages people at the operating level to develop and thus eliminating the need for estimates. implement solutions.

Alcoa Signs Clean Air sulfur dioxide (SO2) and nitrogen oxide lion on additional environmental miti- Settlement in Texas (NOx) emissions from its Rockdale gation projects. These include power generators. US$1.75 million for land and habitat In 2003, Alcoa settled a long-running preservation and US$750,000 for Alcoa had already voluntarily reduced dispute with citizens groups in Texas school bus emission reductions in the NOx emissions by approximately 50% (USA), clearing the way for a new mine local area. near Rockdale that will help make its and committed to further reducing SO2 aluminum plant there more competitive emissions by 90%. The 2003 settlement With the agreement reached, Alcoa globally. extends that commitment, with Alcoa has begun work on its Three Oaks either shutting the units down beginning Mine. This mine will supply lignite coal As part of the agreement reached with in April 2007 or reducing NOx emissions for power operations at its Rockdale

the U.S. government, the State of by approximately 90% and SO2 by 95%. Operations, which employs 1,135 and Texas, and the three citizens groups, These reductions will eliminate 52,000 produces metal for the aerospace,

Alcoa will continue its work to reduce metric tons of SO2 emissions and 17,000 automotive, and industrial markets. metric tons of NOx emissions annually. In addition to the settlement’s emission reductions, Alcoa also agreed to pay US$1.5 million and to spend US$2.5 mil-

27 Social Performance Indicators

At Alcoa, the health and well-being WORK ENVIRONMENT ensure that no employee is ever mar- of the communities where we oper- ginalized and that the work climate Equal Opportunity Statement ate is vitally important. We measure promotes inclusiveness. Alcoa is an Equal Opportunity our success as a company by the suc- Employer, supporting a diverse work One of the challenges that we face is cess of many stakeholders, including environment that fosters communi- determining the appropriate models our employees and the people in our cation and involvement, while pro- of diversity within the cultural com- communities. viding reward and recognition for plexity of our global family and then Despite their importance to us, mean- team and individual achievement. All collecting data to reflect our progress ingful social metrics at a global level qualified individuals seeking job toward those models. We view our remain the most challenging to identi- opportunities with the company will ongoing efforts as a core part of our fy. In this report and in other commu- receive consideration for employ- Values and constantly strive to create nications, you will see what we meas- ment without regard to race, color, an inclusive environment wherever ure in work environment, community religion, sex, physical impairment, or we operate. We still have much work engagement, community investment, national origin. to do in this area, but we are making community progress, and social im- progress. Our leadership group and Diversity pact. We consider our commitment in Board of Directors reflect the global Diversity and inclusiveness within these areas to be longstanding and nature of our enterprise with repre- our organizational culture are cen- long-lasting, but the way we measure sentation based on gender, regional, tral to our aspiration of being a val- and report our social performance and disciplinary diversity. ues-based and value-creating enter- will evolve over time. prise. Our Alcoa Business System begins with a fundamental respect for the contributions of each of our employees, respects individual differ- ences as strengths, and nurtures opportunities to achieve professional and personal success. We seek to

Alcoa Women’s Network ate a mentoring program are cascading Launched as a six-month pilot in 2003, the effort throughout the varying layers the mentoring program connects In an effort to help Alcoa improve its and businesses of the global organization. high-potential women nominated by recruitment, retention, and promotion of their group president or resource unit “The local networks are an opportunity for women leaders, a group of senior leaders with a senior leader. Goals for women leaders within the same region women executives within the company 2004 include increasing the number of but perhaps within different businesses or is leading the development of the world- women being mentored and expand- resource units to get to know each other wide Alcoa Women’s Network. An early ing the mentor base to include male via face-to-face meetings and conference success stemming from their efforts has leaders. been the introduction of programs to calls,” said Barbara Jeremiah, Alcoa’s identify and address issues that affect executive vice president of corporate In the early stages of its formation, the the company’s women leaders. development and a founder of the Alcoa group conducted benchmarking on Women’s Network. “The local networks networks within other companies to The group’s work is primarily aimed at also bring in guest speakers to cover identify potential successful strategies developing women who can compete for issues that are significant to them. Our for Alcoa. Goals for 2004 include fol- and be successful in director and execu- goal in 2003 was to create five of these lowing up on this initial benchmarking tive level positions. However, 2003 initia- networks, and by year’s end we had 11 in and having a new sub-team explore tives to develop local networks and cre- various stages of formation. These work/life balance issues. include networks in the United States, Brazil, and Europe.” 28 Social Performance Indicators

Number of Employees Employees by Region

2000 142,000 U.S. Other Americas1 Europe2 Asia Pacific 2000 61,600 46,500 27,400 6,500 2001 129,000 2001 56,500 38,700 27,700 6,100 2002 53,500 38,200 28,300 7,000 2003 49,300 35,300 27,700 7,700 2002 127,000 1Includes Caribbean, Mexico, and South America 2Includes Middle East and Africa 2003 120,000

0 50,000 100,000 150,000 Employees in North America in 2003 Labor Costs Alcoa does not aggregate global data (billions of US dollars) differentiating part-time from full-time employees. United States 64% 2000 5.2 Improving Gender Balance Mexico 29% 2001 5.7 Dialogue with external stakeholders

% emphasizes gender balance as an Canada 7 2002 5.5 area of mutual interest. 2003 6.1 We have focused our efforts to catalyst for the further development improve the representation of 0246108 and advancement of women leaders Includes salaries plus employee expenses for external women in our top 1% of corporate training, transfer and relocation, expatriate costs, in Alcoa. This year, we feature a case workers’ compensation, travel, recognition and rewards, leadership positions. Since 1998, we medical expenses, meals, recruitment, transportation, study outlining the network’s activi- education, work clothes, and other employee-related more than doubled the actual num- expenses. Excludes contract and temporary labor. ties and achievements to date. 2000 figure includes six months of labor costs of mid- ber of women in key leadership roles year acquisition of Reynolds Metals. 2003 figure includes $345 million in labor costs for Fairchild acquisition. and increased their representation to Increase in labor costs per employee due to rising U.S. 12% — an almost 40% increase. health care costs and the effects of currency translation. Through the initiative of some of our Labor/Management Relations women leaders, we have created the We recognize and respect the free- Alcoa Women’s Network to provide a dom of individual Alcoans to join, or refrain from joining, legally author- ized associations or organizations.

Earthwatch Expeditions: The Alcoa expeditioners were all volun- Partnerships in Conservation teers who nominated themselves for Alcoa’s Andrew Elliott (right) helps survey selection. Earthwatch and Alcoa selected For Veronique Ansermet, an Alcoa the butterflies of Vietnam. the expeditioners on merit, and employee from Lausanne, Switzerland, Earthwatch paid all travel and accommo- helping scientists working to save the must also rely on ourselves to do the tiny dation costs. The expeditioners used their leatherback turtles in St. Croix brought things that will make the difference.” available vacation time for participation, a new perspective. and all shared their experiences through Alcoa’s support for the Earthwatch Institute, diaries posted on Alcoa’s website. “This experience has really been the which engages people in scientific field time of my life — not only because I research and education to promote the While helping add to the knowledge was able to be in close contact with an understanding and action necessary for a needed to build a sustainable future, absolutely fascinating animal, but also sustainable environment, enables effective this hands-on support for scientific field because I had the occasion to meet partnerships to be established between research offers a rich opportunity for wonderful people and real friends,” business, employees, and conservation- personal development, nurtures said Ansermet. “Being in contact with based organizations. Through these part- relationships between environmental and business organizations, and helps nature is an eye opener about the nerships, Ansermet and six other Alcoa raise awareness and appreciation of responsibility we all play in protecting employees had the opportunity to partici- the Earth’s ecosystems. our environment. We cannot only rely pate in Earthwatch expeditions around the on scientists who have decided to ded- world in 2003 (an eighth could not partici- Sixteen Alcoa employees will be partici- icate their life to this kind of project; we pate due to a broken leg prior to departure). pating in Earthwatch expeditions in 2004. 29 HEALTH AND SAFETY The identification and management of achieved a 55% reduction in the num- ergonomic (ergo) risks continue to be ber of ergo-related total recordable Health Summary high priorities. Of our established incidents and nearly a 60% reduction In 2003, we continued our progress locations, 99% had identified their top in number of ergo-related lost work- toward eliminating workplace health 10 ergonomic risks by year’s end. In day incidents. For 2003, the total hazards. At year’s end, 100% of our addition, 58% of the top 10 ergo risks recordable ergo-related incident rate reporting locations had identified had been eliminated versus a year-end was 29% lower and the lost workday and described these hazards. Quanti- target of 50%. Ergonomic self-assess- ergo-related incident rate was 40% tative assessments, which are the ment scores of good or better were lower than those rates for 2002. number of workplace health hazards achieved in 78% of our plant loca- assessed compared to the hazards While we have achieved good tions, and this performance is reflective that need to be assessed, reached a progress in ergonomics, we have of the comprehensive deployment of level of 88% versus a target of 95% planned more aggressive programs plant ergonomic programs. due in part to recent acquisitions and for 2004 and 2005. Our new target continuous hazard reassessments. These ergonomic initiatives con- for eliminating ergonomic risks calls tributed significantly to our improve- for a 50% reduction in all significant Our reduction in the number of ments in lost workday and total ergonomic risks within the corpora- chemical hazards that exceeded recordable rates for 2003. Not only tion — not just the top 10. Alcoa standards from the established have our overall incident rates 1999 baseline was 61% versus a tar- In alignment with our healthy work- declined, but the percentage of inci- get of 40%. The 40% reduction tar- force initiatives, nine out of 10 loca- dents attributable to ergonomic con- get was achieved in 2002. tions worldwide now have in place cerns has also declined at a higher rate. health promotion activities as well as By year’s end, 96% of our locations In 2003, the percentage of lost work- employee assistance-type services. had occupational medical services pro- day and total recordable incidents hav- Moving forward, we will be expand- grams in place, and our rate for com- ing an ergonomic causality was ing our efforts in this area. Key pro- pleting required medical evaluations reduced to 28% and 27% respectively grams to be deployed in 2004 and was 93% versus a target of 100%. compared to 32% and 36% in 2002. Over the past two years, Alcoa has

Achieving Sustainability Alcoa and Alcoa Foundation continue to Internally, Alcoa launched advanced Through Leadership support the World Resources Institute’s general manager and location manager Business-Environment Learning and education and development courses Education and development of leader- Leadership (BELL) program, which in 2003. Each extends over nine ship skills are critical enablers for the assists MBA programs worldwide to bet- month and draws on individualized integration of sustainability principles ter integrate sustainability principles into learning and development processes to into traditional business practice. With traditional business courses. ensure that these managers have the that in mind, Alcoa supports major skills, knowledge, and leadership Each year, the BELL program produces a external and internal initiatives to foster capabilities to advance sustainable report called Beyond Grey Pinstripes that leadership development. practices within their businesses and assesses the programs and professors operating locations. leading this integration. A copy of the 2003 report is available online at http://www.beyondgreypinstripes.org/resul ts/index.cfm.

30 Social Performance Indicators

2005 include smoking cessation, flu Occupational Medicine Occupational Medical Evaluations Programs Established (percent of annual required evaluations completed vaccination, and reducing lifestyle by reporting locations) (percent of reporting locations complying) risk factors. These include obesity, 2000 69 2000 98 high cholesterol, and others that are associated with chronic diseases. We 2001 91 2001 94 will also strengthen our efforts in assisting employees with chronic dis- 2002 88 2002 89 ease to achieve their full employment potential. 2003 96 2003 93 0204060 80 100 We were not successful in achieving 0204060 80 100 The number of reporting locations reflected in the data The number of reporting locations reflected in the data our 40% reduction in the number or increased between 2001 and 2002 due to acquisitions. increased between 2001 and 2002 due to acquisitions. magnitude of the top 10 noise haz- ards at each location that exceeded Alcoa standards from the established Industrial Hygiene Assessments — Industrial Hygiene Assessments — Qualitative Quantitative 1999 baseline. At year’s end, we (percent of assessments completed by (percent of assessments completed by stood at 26%. We will continue to reporting locations) reporting location) focus on achieving this 40% reduc- 2000 85 2000 61 tion in 2004 and 2005. We will also 2001 95 2001 75 focus on strengthening our hearing conservation efforts in order to 2002 99 2002 75 reduce and ultimately eliminate work related noise induced hearing 2003 100 2003 88 losses. We have targeted a 25% 0204060 80 100 0204060 80 100 reduction in the incident rate for Qualitative refers to workplace health hazards Quantitative refers to workplace health hazards new work-related hearing shifts in identified and described. adequately measured. employees by year-end 2005 from a baseline of year-end 2003.

Lowering Workplace Exposure Chromium is a naturally occurring ele- mechanical problems with the fume con- to Hexavalent Chromium ment found in rocks, animals, plants, soil, trol systems at these two locations. volcanic dust, and gases. While the hexa- Following adjustments, the facilities Following the release of new, credible valent form of this material is used for came in below the new limit. studies on the long-term health risks dyes and pigments, leather tanning, and In 2003, Alcoa’s Lancaster Works in for people exposed without protection wood preserving, Alcoa uses it primarily Pennsylvania (USA) finished a 20-year to hexavalent chromium, Alcoa took for chrome plating and paint pretreatment. quest to completely eliminate hexava- action to reduce the workplace expo- Locations that used the material had two lent chromium from its manufacturing sure limit for this material. choices — take the necessary steps to process. The facility used the material reduce workplace exposure or completely In early 2003, Alcoa reduced the limit as a paint pretreatment for high-end eliminate the material’s use. for both soluble and insoluble hexava- exterior building panels because of its lent chromium to 0.25 micrograms per Alcoa’s Southern Graphic Systems chose adhesion and corrosion resistance prop- cubic meter as a time-weighted aver- to ensure every location that manufactured erties. Working closely with the cus- age — a limit that is about 200 times chrome-plated cylinders for printing press- tomer, paint supplier, and pretreatment lower than that currently required by es met the new limit. Ongoing monitoring coating supplier, Lancaster developed a the U.S. Occupational Safety and of workplace exposure limits showed that pretreatment system that does not use Health Administration (OSHA). all but two locations were operating below chrome yet provides the same amount the new chromium limit prior to it being of corrosion resistance and adhesion. implemented. Investigations revealed 31 Health and Safety Capital Expenditures Our health and safety management Cumulative Noise Magnitude (millions of US dollars) systems include recording and notifi- Reduction 2000 79 cation of occupational accidents and 1999-2003 26% reduction in the diseases. Our internal standards 1999 baseline magnitude of the top 10 2001 102 meet, and in many cases exceed noise sources by reporting

2002 112 country legislative requirements. Our locations practices are consistent with the ILO 2003 50 Code of Practice on Recording and Cumulative Chemical Notification of Occupational 020406080 100 120 Magnitude Reduction Capital expenditure for health and safety purposes Accidents and Diseases. Any differ- in the period 2000-2002 relates to the upgrading 1999-2003 33% reduction in the mag- of standards at newly acquired companies — ences are of a minor nature. Reynolds (2000), Cordant (2001), Ivex (2002), 1999 baseline nitude of chemical hazards and Fairchild (2002). Spending in 2003 is reflective of the business condition, success in previous years Over the next two years, the Alcoa exceeding Alcoa standards to upgrade acquired locations to Alcoa standards, as well as a greater emphasis on non-capital solutions to Health and Safety Management by reporting locations health and safety issues through the use of the Alcoa Business System, which engages people at the System will be aligned to conform operating level to develop and implement solutions. with ISO 14001 and OHASA 18001. Cumulative Chemical Number This initiative will further strengthen Reduction Health and Safety Management our health and safety management 1999-2003 61% reduction in the num- System initiatives in such key areas as roles/ Over the years, a comprehensive responsibilities and action plans with 1999 baseline ber of chemical hazards framework for continuous improve- closure timelines. exceeding Alcoa standards ment efforts has evolved into what is by reporting locations today known as the Alcoa Health Healthy Workforce Initiatives and Safety Management System. Zero injuries and zero work-related Top 10 ■ Risks Identified This is a comprehensive system used illnesses are Alcoa’s long-standing Ergonomic Risks ■ Risks Eliminated (percent of reporting locations) to proactively manage health and goals, but we also believe that it is 70 2001 safety at all Alcoa locations. possible to go further — for people 19 to go home healthier than when they 93 2002 Each location has various task, depart- came to work. 34 99 ment, ad hoc, and other committees to 2003 58 develop and implement health and Consequently, one of Alcoa’s six safety programs based on the loca- strategic health and safety objectives is 02040 60 80 100 tion’s strategic health and safety plan. the deployment of healthy workforce initiatives. In each case, these initia- These leadership groups include a mix Locations with a Good or Better tives rely on the most efficient combi- Alcoa Self Assessment Tool Score of personnel from the facility. in Ergonomics nation of community and company 2002 resources. The specific type and nature 61 of the initiatives at any given Alcoa 2003 78 location are dictated by local work- force and community expectations. 0204060 80 100 The Alcoa Self Assessment Tool is a type of self- audit that is required to be performed at least once In 2002, we completed an inventory every 18 months by every Alcoa location or of our global healthy workforce ini- administrative process worldwide. tiatives. In 2003, we began tracking plant location activity as it relates to community health initiatives (see page 40).

32 Social Performance Indicators

Ergonomic Incidents and were able to return to work the

Total Number of Percent of TRR Total Lost Number of Percent of LWD next day in 2003. Recordable Ergo-related Incidents Workday (LWD) Ergo-related Incidents (TRR) Incidents TRR Incidents Ergo-related Incidents LWD Incidents Ergo-related Four people, however, were fatally 2000 5,081 1,460 29% 367 125 34% injured at work. These were three 2001 4,904 1,560 32% 417 149 36% 2002 2,931 933 32% 212 77 36% Alcoa employees and one contractor. 2003 2,497 701 28% 223 60 27% As with all fatalities, we have ques- Year 2000 and, to a lesser extent, 2001 information on ergo-relatedness is incomplete due to inconsistent capturing of information tioned every aspect of these incidents in Alcoa’s Incident Management System. to identify steps that might have pre- vented this unfortunate and unneces- Management of Chronic Illness Reasonable accommodations to the sary loss of life. While there is no in the Workplace Standard physical needs of such personnel will single common cause for the fatali- Alcoa maintains a worldwide be made on a case-by-case basis and ties, it becomes clear that human health standard that enables and will, at a minimum, meet all applica- error has played a major role. This supports employees living with ble legal requirements. The standard is not an excuse but instead is a call chronic diseases, including life- also addresses issues of reasonable for the addition of renewed empha- threatening and transmittable dis- accommodation, coworker education sis on two aspects of safety manage- eases like HIV/AIDS, to continue to and counseling, and confidentiality. pursue active careers so long as they ment: the detection and elimination are physically capable of doing so, Safety Summary of low probability events with can perform their assigned duties in In 2003, Alcoa’s global lost workday potential for serious injury or death, an acceptable manner, and do not rate of 12 lost workday injuries per and countermeasures to protect present a direct threat to the health 10,000 people in our workforce was against the distractions, stress, emo- and safety of themselves or others the best in Alcoa’s history. Each day, tional influences, boredom, and at work. we see more evidence that our goals of zero injuries and zero fatalities are within reach. Globally, more than 99.8% of our employees went home

Safety in Suriname being faced by employees. Critical needs ly employed medical staff of 18 active- can then be addressed more quickly. ly supports health and safety pro- Alcoa’s Suralco alumina refinery in grams that include medical care for Five years ago, the facility started a safe- Suriname received the International employees, their families, and Aluminum Institute’s “Best Safety ty program based on peer observations retirees. Performance in the World” award in of work being completed. Properly trained 2003. Behind this honor is the belief people watching can often see potential “Reducing the number of incidents that all incidents can be prevented and for injury or improvement that can escape from 200 a year to 75 a year is the a safety program that requires total people actually doing the work. The total easy part,” said Jan Vandenbergh, involvement from all people who enter workforce was trained in observing safe environment, health, and safety man- the facility. behavior, and 1,900 job safety observa- ager for Suralco. “Reducing the num- tions are now made monthly. Anonymous ber of incidents from 19 to 12 a year Key to Suralco’s success in reducing data gathered from the observations are and on from there is the difficult part.” all incidents from 66 in 1997 to 22 in used to identify priorities for improvement 2003 — a 67% reduction — is a sys- He adds, “The award from the in various operating areas. tematic and consistent safety approach. International Aluminum Institute is sig- Monthly safety meetings create an The facility also has an effective safety nificant for Suralco. It shows we’re open forum for discussing workplace award system that matches other tradi- making progress and earning success issues, providing managers with an tional performance appraisal systems, through systematic and consistent understanding of the safety issues such as financial and customer satisfac- commitment to safety.” tion. In addition, the refinery’s permanent- 33 fatigue that inevitably creep into any Total Fatalities ■ Employee Alcoa’s approach to issues involving ■ Contractor human organization. human rights is guided by our Values 2000 36 and Principles. Another safety development in 2003 was the appointment of our corporate 2001 1 Children and Young Workers safety director, Rick Williams, to the As a fundamental principle, we do 2002 1 1 newly convened NASA Aerospace not employ children or support the Safety Advisory Panel. He will assist 2003 3 1 use of child labor. We do encourage the U.S. space agency in its ongoing the creation of educational, training, 0 2 46810 review and improvement of safety or apprenticeship programs tied to systems, operations, and culture. HUMAN RIGHTS formal education for young people.

Lost Workdays ■ Lost Workdays Alcoa is a global enterprise that Freedom of Engagement ■ US Industry Average does business in many distinct local We believe that people should work 0.18 2000 2.0 markets. In order to do so success- because they want or need to, not 0.16 fully, we rely on all Alcoans living because they are forced to do so. 2001 1.8 our Values and supporting We prohibit the use of prison labor, 0.15 2002 1.7 Principles. We also work under an forcibly indentured labor, bonded 0.12 explicit statement of human rights labor, slavery, or servitude. 2003 that creates a coherent language for Equality of Opportunity 0 0.5 1.0 1.5 2.0 defining leadership across multicul- We recognize, respect, and embrace 2003 industry average not available tural boundaries. the cultural differences found in the

Total ■ Total Recordable Injuries Values provide the common frame- worldwide marketplace. Our work- Recordable Injuries ■ US Industry Average work for our decisions, actions, and place is a meritocracy where our 2.89 2000 behaviors. They are our universal 9.0 goal is to attract, develop, promote, 2.55 language — transcending culture and and retain the best people from all 2001 8.1 geography. Living our Values cultures and segments of the popula- 2.22 2002 requires us to meet the highest stan- 7.2 tion, based on ability. We have zero 1.69 dards of corporate behavior in all tolerance for discrimination or 2003 aspects of business — in all regions harassment of any kind. 0246810of the world. The foundation of our 2003 industry average not available Values is dignity and mutual respect, which are fundamental to our enter- prise.We have a global Ethics and Compliance Line (see page 13) to enable employees to anonymously report, in their native language, any concerns they may have. We follow up on every reported issue.

34 Social Performance Indicators

Compensation where we operate and take into SOCIETY We ensure that compensation meets account their needs, concerns, and More than 50 years ago, Alcoa insti- or exceeds the legal minimums and aspirations. tutionalized its ability to invest in is competitive with industry stan- Supplier and Contractor Alcoa communities by establishing dards. Our compensation philosophy Requirements an asset-based foundation. Since is clearly communicated to employ- Alcoa has a comprehensive Ethics 1952, Alcoa Foundation has been ees and is in full compliance with all and Compliance Program that the primary instrument for our com- applicable laws. requires adherence to our policies munity investments, granting more Freedom of Association and guidelines, which include envi- than US$371 million in over 30 We recognize and respect the free- ronmental and social responsibilities. countries since its founding. These dom of individual Alcoans to join, or Available in 18 languages, the mate- grants have taken many forms and refrain from joining, legally author- rials are provided to all employees benefited thousands of non-govern- ized associations or organizations. and long-term contractors through- mental organizations (NGOs), hun- out the world. dreds of communities, and countless Relationships with Indigenous individuals striving to improve their People The materials are also available to quality of life. (The foundation’s Within the framework of our Values, all current and potential suppliers policies, practices, and priorities can we respect the cultures, customs, and via alcoa.com. Beginning in 2003, values of the people in communities these materials — and training as appropriate — were provided direct- ly to our major suppliers to ensure that they are aware of our require- ments for business conduct.

Bringing Social Responsibility dards; and serving on the ongoing com- The principles and standards cover to the Supply Chain mittee that will deliver and explain the seven areas of social responsibility: principles and standards. community, diversity, environment, Supply management professionals are ethics, financial responsibility, human “The Alcoa representatives brought expe- in an ideal position to contribute to the rights, and safety. The institute plans to rience and knowledge in the area of refinement of social responsibility both ask Fortune 500 companies to adopt social responsibility and its importance to inside their companies and with their the new principles and standards or business,” said Scott Sturzl, C.P.M., vice supply chains. That reality led the show that a comparable document president of educational development Institute for Supply Management to already exists. The organization will resources for the institute. “This was develop its Principles and Standards of also conduct ongoing research to shared with the commission to help Social Responsibility, which will be measure whether it is influencing posi- members understand the direction that officially released in April 2004. tive change and to provide companies should be taken, the information that with a means to benchmark their social Alcoa employees participated in the should be incorporated in the final stan- responsibility work. development of the principles and dards and principles, and the cultural standards in three ways: serving on the challenges that might be faced when talk- In 2003, Alcoa convened an internal organization’s board, which made the ing about social responsibility around the team to examine its social responsibili- decision to pursue the project; being a world. All of this input helped the commis- ty initiatives and formally develop the member of the commission that devel- sion develop a document that uses care company’s positions on the institute’s oped the actual principles and stan- in its wording but also takes a stance on seven areas of social responsibility. the importance of social responsibility.” 35 be found in the Community section property provide additional Alcoa Alcoa Community Giving of alcoa.com.) assets for community enhancement. The following data reflect the addi- Our social commitment is evidenced The sharing of knowledge and tion of cash, product, and property- in more than grantmaking. insight and the development of com- related gifts from Alcoa that began in Employee volunteerism offers a munity partnerships and methods to 2001 to supplement Alcoa growing and global aspect of our sustain NGOs offer still other Foundation’s grantmaking. These engagement with communities dimensions of our work. These are additional resources reflect our desire through company-supported but reflected, in part, in our community to maintain an appropriate and lead- Alcoa Foundation-managed pro- advisory and community framework ing level of investment in our commu- grams like ACTION and Bravo! data and in the case studies present- nities as we expand to new markets, grants. The giving of products and ed throughout this report. countries, and communities.

Alcoa Community Giving (US dollars)

2000 Total U.S. Mexico Canada Africa Asia Australia Caribbean Central & Europe Global S. America Alcoa Foundation 20,103,977 15,385,392 456,528 204,500 25,000 148,284 1,250,290 1,508,683 1,125,300 Other Related Foundations 1,348,333 868,002 45,500 434,831 Alcoa 3,286,315 1,493,338 83,825 197,390 694,808 56,489 498,014 262,451 Excess FMV of Donated Property Total Combined Giving 24,738,625 17,746,732 456,528 333,825 0 222,390 694,808 204,773 2,183,135 1,771,134 1,125,300

2001 Total U.S. Mexico Canada Africa Asia Australia Caribbean Central & Europe Global S. America Alcoa Foundation 21,284,784 15,029,312 948,750 209,200 196,892 99,500 100,000 167,000 1,306,781 1,897,350 1,330,000 Other Related Foundations 658,951 189,250 8,000 461,701 Alcoa 18,088,028 11,090,743 3,240,453 9,799 699,904 64,508 2,229,606 753,015 Excess FMV of 12,600,000 12,600,000 Donated Property Total Combined Giving 52,631,763 38,909,305 948,750 3,457,653 196,892 109,299 799,904 231,508 3,998,088 2,650,365 1,330,000

Building Stronger environment that encourages coordinated arts. They also have strong and natural Communities in Australia research to resolve the complexities of links with schools and colleges. developing stronger communities. Strong communities emerge from the Throughout Australia, communities are active collaboration of individuals, insti- The center is monitoring community facing the challenges of new technolo- tutions, governments, and businesses trends and will provide policy makers, gy and the development of “virtual” in developing strategies for dealing practitioners, and researchers with tools communities. Increased work demands with change and seizing opportunities and language for creating policies and limit the time people can engage in for growth. In 2003, Alcoa and Curtin programs that can improve the quality of their communities, and a population University of Technology launched a life in Australian communities. The center shift to large cities is further disinte- unique program to strengthen is closely linked with similar Australian grating Australia’s rural communities. Australian communities that have been initiatives, including the federal govern- “By working toward stronger communi- weakening in recent years due to tech- ment’s Stronger Families and ties at family, local, and state levels, nological and societal changes. Communities Project. we lay the foundation for strong and The Alcoa Research Centre for Strong communities involve people of all harmonious communities at national Stronger Communities, under the aus- ages and embrace cultural diversity. They and global levels,” said Professor pices of Curtin’s Division of Humanities, have shared commitments with local gov- Lance Twomey, vice chancellor of provides a multi-disciplinary research ernment, workplaces and community serv- Curtin. “That’s why this work is so ices, and they recognize the fundamental important.” 36 importance of sport, recreation, and the Social Performance Indicators

Alcoa Community Giving (US dollars) continued

2002 Total U.S. Mexico Canada Africa Asia Australia Caribbean Central & Europe Global S. America Alcoa Foundation 17,211,415 11,464,815 840,800 229,285 196,394 20,000 135,000 167,085 1,088,834 1,879,201 1,190,001 Other Related Foundations 536,022 44,783 6,000 485,239 Alcoa 11,355,071 6,273,962 723 178,829 44,239 1,156,334 102,057 2,679,971 918,957 Excess FMV of 5,650,000 5,650,000 0 Donated Property Total Combined Giving 34,752,508 23,433,560 841,523 414,114 196,394 64,239 1,291,334 269,142 4,254,044 2,798,158 1,190,001

2003 Total U.S. Mexico Canada Africa Asia Australia Caribbean Central & Europe Global S. America Alcoa Foundation 14,970,191 8,808,555 620,387 205,500 234,500 75,000 236,500 105,000 1,241,430 1,233,140 2,210,179 Other Related Foundations 517,000 517,000 Alcoa 11,069,967 7,481,969 122,755 485,078 72,284 2,096,064 (4,729) 393,934 422,612 Excess FMV of 265,405 170,453 94,952 Donated Property Total Combined Giving 26,822,563 16,460,977 743,142 690,578 234,500 147,284 2,332,564 100,271 2,247,316 1,655,752 2,210,179

Global grants can be awarded in any country for purposes that benefit multiple countries, including the United States.

Helping Communities Cope reinforces the idea that everyone has a with Emergencies First responder training in Piedras Negras, role to play in keeping communities safe Mexico. and that every citizen, if trained in basic Throughout the world, people who are medical and/or civil response proce- the first to respond to emergencies of supporting first responder training in Alcoa dures, can lend solid support to profes- any kind within their community are communities around the world to enhance sionals in the field and foster community receiving free training on how to pre- community preparedness to cope with preparedness for emergencies. vent injury, facilitate the flow of goods emergencies and natural disasters. Up to US$1.7 million was available for and services, and reduce confusion Training support, delivered by qualified training, with US$200,000 awarded for and loss of life. organizations within each community, is first responder education in New York Alcoa’s First Responder Training available for professional or volunteer City and US$100,000 given to Initiative flowed from the Alcoa Relief emergency medical personnel, police Pennsylvania (site of the Shanksville Fund, originally a fund of nearly $2.5 officers, firefighters, or others trained to plane crash). The remaining funds are million established following the be on site first during an emergency. designated for Alcoa location requests, educational materials, and public September 11th terrorist attacks in the The program builds on Alcoa’s commit- awareness activities. United States. A portion of the money ment to safety and health and the convic- provided immediate relief for the tion that prior analysis, planning, training, In 2003, 107 Alcoa locations requested people, small- and medium-sized busi- and communication can help ease the funding for first responder training. nesses, and communities affected by effects of an emergency. The initiative also Of these applications, 54 were interna- those events. The remaining funds are tional and 53 were U.S.-based. 37 ACTION Grants ice for a nonprofit organization, These figures more than doubled in ACTION increases the benefit by 2002, with 234 employee-directed Since 2001, Alcoans Coming awarding the nonprofit $3,000. community service projects complet- Together In Our Neighborhoods ed in 119 Alcoa locations. In 2003, (ACTION) has recognized Alcoans ACTION began as a pilot in four 341 ACTION projects occurred. for designing community projects as locations in 2000 and grew to 110 This figure was bolstered by Taking a team. When 10 Alcoans organize a projects representing 60 Alcoa loca- Actions — Alcoa’s Worldwide Week project and contribute a day of serv- tions around the world in 2001. of Service in November 2003.

ACTION Grants

2001 Total U.S. Mexico Canada Africa Asia Australia Caribbean Central & Europe S. America Number of Grants 110 67 10 3 8 3 12 7 U.S. Dollar Value $330,000 $201,000 $30,000 $9,000 $24,000 $9,000 $36,000 $21,000 Number of Hours 9,340 5,048 524 328 488 120 1,552 1,280 Number of Employee Volunteers 2,332 1,259 131 82 122 30 388 320 Average Number of Hours per Project 85 75 52 109 61 40 129 183

2002 Total U.S. Mexico Canada Africa Asia Australia Caribbean Central & Europe S. America Number of Grants 234 105 17 18 3 36 3 24 28 U.S. Dollar Value $702,000 $315,000 $51,000 $54,000 $9,000 $108,000 $9,000 $72,000 $84,000 Number of Hours 19,669 7,218 816 1,423 173 5,615 120 2,422 1,882 Number of Employee Volunteers 4,106 1,496 200 245 51 1,392 30 331 361 Average Number of Hours per Project 84 69 48 79 58 156 40 101 67

2003 Total U.S. Mexico Canada Africa Asia Australia Caribbean Central & Europe S. America Number of Grants 341 166 25 18 1 44 33 54 U.S. Dollar Value $1,023,000 $498,000 $75,000 $54,000 $3,000 $132,000 $99,000 $162,000 Number of Hours 25,257 11,158 3,367 1,299 40 2,522 3,223 3,648 Number of Employee Volunteers 4,461 2,031 485 195 10 598 492 650 Average Number of Hours per Project 74 67 135 72 40 57 98 68

Bravo! Grants teers at least 50 hours a year at a ed by December 31, 2003, for both Alcoa’s Bravo! program, which charitable organization, Alcoa 2002 and up until year’s end 2003. began worldwide in 2002 after a awards the organization $250. Additional 2003 Bravo! awards will pilot phase in 2001, recognizes be granted through the 2003 appli- Applications for community service employees who can make a substan- cation deadline of March 31, 2004. tial time commitment to a nonprofit performed in 2002 were accepted or NGO. When an Alcoan volun- through late spring of the next year — 2003. The following data include the number of Bravo! grants award-

38 Social Performance Indicators

Bravo! Grants

2002 Total U.S. Mexico Canada Africa Asia Australia Caribbean Central & Europe S. America Number of Grants 437 143 19 161 2 55 57 U.S. Dollar Value $109,250 $35,750 $4,750 $40,250 $500 $13,750 $14,250 Number of Hours 35,758 8,644 966 20,275 100 2,750 3,023 Average Number of Hours per Volunteer 82 60 51 126 50 50 53

2003 Total U.S. Mexico Canada Africa Asia Australia Caribbean Central & Europe S. America Number of Grants 1,795 369 92 140 358 613 223 U.S. Dollar Value $488,750 $92,250 $23,000 $35,000 $89,500 $153,250 $55,750 Number of Hours 169,136 45,339 5,196 19,634 45,774 30,692 22,501 Average Number of Hours per Volunteer 94 123 56 140 128 50 101

Taking Action — work in teams or individually at non- over 235 events that ranged widely Alcoa’s Worldwide Week of profits and to help nonprofits attract from volunteer fairs and employee Community Service volunteers to their efforts. More than recognitions to the planting of native As a capstone to Alcoa Foundation’s 150 Alcoa locations participated at plants and vegetation, environmental 50th anniversary yearlong celebra- awareness, and the cooking and tion, Alcoa launched its first ever delivery of food bank meals. worldwide week of service The Week of Service focused on November 17-23, 2003. the theme of conservation and sus- Taking Action — Alcoa’s Worldwide tainability to underscore our values Week of Community Service provid- and to encourage location and ed a unified timeframe for Alcoans to

Taking Action — Pennsylvania, USA Alcoa’s Worldwide Week of A group of 29 Alcoa employees, family Community Service Environmental horse ride in Itajuba, Brazil. members, and friends worked with the Manheim Township Overlook Foundation Taking Action — Alcoa’s Worldwide Week complete listing of activities by country to improve wetlands. They developed a of Community Service in November 2003 and the employees who received special stormwater filtering system and planted matched employee volunteer time with recognition and one-time $1,000 grants trees and native plants to attract wildlife Alcoa grants. Nearly 45% of the projects for their NGOs is available on alcoa.com. and fowl back to the area. The activity undertaken during the Week of Service The following illustrate the range of activi- combined ACTION, Life! and the 10 highlighted conservation and sustainabili- ties and their worldwide reach. Million Trees initiatives in this riverbank ty, an Alcoa Foundation Area of improvement. San Ciprian, Spain Excellence and a focal point for Alcoa’s Students at the Vista Alegre School can sustainability initiatives. Itajuba, Brazil enjoy a nature walk from their school to a More than 250 students and teachers From working side-by-side with stu- greenhouse thanks to the hands-on were on hand and on horseback for a dents in Romania to clean the Cris efforts of Alcoan volunteers, who cleared workshop given by an Alcoa ACTION River to converting an illegal garbage a trail and planted vegetation as an team. The workshop included a classroom dump into a community garden in ACTION project. Following the event, lecture followed by an environmental Jamaica, Alcoa employees logged thou- more than 400 students, parents, teach- horse riding event to learn more about the sands of volunteer hours in their com- ers, Alcoans, and civic leaders celebrated environment and to plant tree seedlings munities to help make a difference. A with a lunchtime fiesta. donated by Alcoa to the local community. 39 employee engagement with NGOs in U.S. locations so that each plant can Community Health Initiatives this area. More than 6,000 Alcoans conduct a community assessment to The safety and health of the people volunteered in projects during the assure that it speaks and listens to its who live in Alcoa communities remain week, and over 15,000 Alcoans par- local community. This process will of vital concern to us. We reinforce ticipated in Week of Service events. assure that other aspects of the our Values and demonstrate our com- We plan to make this an annual framework related to government mitment to our neighbors when we event and focal point for employee and media relations, effective com- focus on health in the community and engagement. munity consultation, and employee share information that can lead to engagement are directly linked to the injury and disease prevention, healthi- Community Consultation location’s business strategy and will er lifestyles, and better life prospects The Alcoa Community Framework is have a positive contribution to the for community residents. designed to build strong relationships bottom line. with employees, their families, com- In 2003, we instituted new tracking munity leaders, and government offi- About 30% of our worldwide oper- and reporting methods to capture cials. The framework allows for great ating locations have some type of data on the number of Alcoa loca- local flexibility and results in com- established community program to tions that have engaged their com- munity engagement through a variety meet with community leaders, munities through health-related ini- of events. These range from simple engage residential members of the tiatives. Our first year of reporting briefings, issue discussion forums, community, and/or address areas of indicates that more than 115 Alcoa open houses, plant tours, and tree shared concern. locations have already linked with plantings to active participation by their communities through 251 com- The inaugural Alcoa Global community members in the develop- munity health programs — engaging Leadership Award for Best ment of our locations’ environmental 258,093 individuals worldwide. Community Engagement recognized improvement programs. Alcoa Rigid Packaging as the Alcoa Bribery and Corruption In the United States, for example, business unit that, in 2003, created an Alcoa has a corporate-wide policy implementation of the Alcoa environment to make all of its loca- and zero tolerance for bribes. Our Community Framework is mandato- tions the best in their communities by corporate approach is one of strict ry, and we created a seven-person effectively combining community compliance with all laws focused on Public Strategy Group to work with activities to achieve the goals and anti-bribery and corruption, such as every location to implement the objectives of both Alcoa Foundation the provisions of the Foreign framework. In 2003, this team began and the Alcoa Community Corrupt Practices Act (FCPA). a formal process with more than 130 Framework simultaneously. Alcoa’s policy in this regard clearly states that all directors, officers, and Number of Locations Number of Number of Holding Community Programs Programs Community Participants employees shall comply with all laws 2001 65 231 430,998 and regulations that are applicable 1 2002 109 501 369,608 to the company’s activities. These 2003 105 575 436,844 provisions of Alcoa’s Business 1Due to Alcoa’s revised standards for community programs, locations are now reporting better data related to the number of individuals directly impacted instead of those indirectly impacted by means of newsletter circulation or event sponsorship. Conduct policy are further rein- forced and specifically addressed in Alcoa’s Guide to Business Conduct, which has been translated into 18 languages and deployed globally to all employees and contractors.

40 Social Performance Indicators

Political Contributions PRODUCT 2. Users will be able to choose Pursuant to Alcoa’s business conduct RESPONSIBILITY whether or not they want to pro- policies, the use of company funds, vide that information. Customer Environmental, property, services, and things of Health, and Safety Activities 3. Any information collected about value for or in aid of (or in opposi- In response to increasing requests users will be secure and not shared tion to) any political parties or can- from customers and suppliers, Alcoa with any third parties unless users didates for public office is prohibit- conducted three daylong benchmark- give prior permission for that ed. Similarly, the policies dictate that ing sessions in North America during information to be shared. no such corporate asset may be used, which we openly shared our without the prior written approval 4. Users will have access to any per- approach to environment, health, of Alcoa’s Chairman of the Board sonal information Alcoa collects and safety. Topics include integration and the general counsel, for or in aid and keeps about them, and they of EHS into manufacturing process- of (or in opposition to) any commit- will be able to securely change or es, fatality prevention, occupational tee whose principal purpose is to delete that information at any health initiatives, environmental pro- influence the outcome of a referen- time. grams, internal audit programs, and dum or other vote of the electorate metrics systems. Because Alcoa offers a wide range of on a public issue. online business opportunities for its Product Information and Employees may volunteer their own customers, the amount of informa- Labeling time to assist a candidate or cam- tion the company needs to collect in Product labels and material safety paign committee. However, company order to serve them in a particular data sheets are made available to all facilities, employee work-time, sup- business transaction will sometimes customers, with some available in port services, office supplies, elec- vary from case to case. Regardless of multiple languages. For a complete tronic mail access, etc., may not, the amount of information collected, listing, visit alcoa.com. under any circumstances, be utilized the four principles listed above will in such an effort. Nor does the com- Online Privacy Statement apply. Wherever Alcoa collects per- pany allow the formation of political (Worldwide) sonal information, users will find a action committees (PACs). Alcoa is committed to safeguarding link to this privacy statement. If privacy online. From time to time, users choose not to provide some Similarly, corporate funds cannot be Alcoa may make changes to this pri- information, for example to enable used to purchase tickets or otherwise vacy statement to reflect changes in confirmation of credit status, it may pay for the admission fee (or other its business or to serve users better. not be possible for them to proceed expenses) to fundraising activities of Alcoa will use reasonable efforts to with their chosen business activity any candidate, potential candidate, publish any such changes in the pri- with Alcoa. political committee, or political party. vacy statement. Alcoa protects privacy on alcoa.com through four basic principles:

1. Users will always be advised when Alcoa is collecting information about them or their online prefer- ences and expectations and it will be made clear how that informa- tion is to be used.

41 Economic Performance Indicators

One of the cornerstones of Alcoa’s LONG-TERM Index of 13% and 5% respectively Vision is our focus on creating supe- SHAREHOLDER VALUE over the same period. rior economic value for our stake- Our commitment to our Values and In 2003 alone, we posted a total holders while living our Values. This, our performance against our finan- shareholder return of 71%, far we believe, is a key component of cial goals has resulted in superior exceeding the S&P 500 Index (29%) our contribution toward sustainable shareholder returns. We delivered a and the Dow Jones Industrials development. 1 total shareholder return of 18% Index (28%). Our goal to create superior economic over the last 10 years and 17% over 1 the most recent five years compared Represents the annualized return a given value is underpinned by three finan- investment in a stock would have delivered cial goals: joining the first quintile of to the S&P 500 Index of 11% and over a given period with the assumption that S&P Industrials in return on capital –1% and the Dow Jones Industrials all dividends are reinvested in that stock. performance and return greater than cost of capital through the cycle; sus- Alcoa Share Price Performance 600 tained cost reduction; and a strong ■ Alcoa ■ S&P 500 Index balance sheet. These financial goals ■ Dow Jones Industrials 500 have at their foundation our commit- ment to live by our Values. 400

300

200

100

0 Dec 93 Dec 94 Dec 95 Dec 96 Dec 97 Dec 98 Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Source: Bloomberg

the 555-seat aircraft as part of the to link. As a result, the A380 will use largest and fastest development about one million Alcoa Lockbolts on program ever undertaken by the metals every aircraft. manufacturer.” A new, highly damage-tolerant alloy Airbus and Alcoa The A380 features more new Alcoa called A6013 HDT is used for the A380 Perhaps the best recognition of a materials and products than any other fuselage skins, while the largest die team’s work is when a customer cites aircraft on which the company has been forgings ever made by Alcoa will serve its efforts. According to Airbus, “Alcoa involved. Alcoa products are literally as the aircraft’s 21-ft.-long 6-ft.-wide sought — and won — a strategic posi- used from nose to tail, beginning with wing spars. tion on the A380 by applying its inte- forward landing gear support structure to On the A380’s upper wing, skins meas- grated product approach.” forgings for the horizontal and vertical uring up to 112 ft. in length are being stabilizers. “Alcoa applied all of its aviation indus- produced from A7055 alloy, and Alcoa try experience to the A380 program, Working closely with Airbus’ design team, is manufacturing lower wing skins with developing new alloys specifically for Alcoa Fastening Systems developed the the A2024 HDT alloy that also provides XPL® Lockbolt with a titanium collar that high damage-tolerant qualities. is both strong enough to handle the wing’s great size and compatible with the composite and aluminum materials it has 42 Economic Performance Indicators

Alcoa has been listed on the New since 1939. Currently, we pay a divi- Distribution to Shareholders 1 York Stock Exchange (ticker symbol: dend four times a year. The Board of Dividends1 Dividends Paid (millions of US dollars) per Common Share AA) since 1951 and currently has an Directors determines the amount of (US dollars) estimated 278,400 common share- dividend paid, taking into account 2000 418 0.50 holders that owned, on average, 853 various factors that include opera- 2001 518 0.60 2002 509 0.60 million common shares in 2003. tional performance and capital 2003 516 0.60

requirements. Our dividends have 1 Our returns to shareholders have Includes dividends to both common and preferred grown at a compounded annual rate shareholders been delivered through a combina- of 12% for the last 10 years. tion of capital growth and dividends. Alcoa is committed to continually 1Alcoa currently has secondary listings on distributing some of its earnings to exchanges in Australia, Belgium, Germany, Switzerland, and the United Kingdom. Our shareholders through dividends, preferred shares are listed on the American which have been paid uninterrupted Stock Exchange.

Return on Capital — Return on Capital Progress Toward First Quintile 30 Top Quintile S&P Industrials Alcoa’s return on capital (ROC) for the Alcoa full year of 2003, as measured by 20 Bloomberg, was 7%, up from 4.2% in 2002. The entry point of the first quin- tile of the S&P Industrials, as of third 10 quarter 2003, was 15.9%. Alcoa remains committed to the goal of achieving first quintile return on capital. 0 2000 2001 2002 1Q 2Q 3Q 4Q 2003 2003 2003 2003 Indicators are based on Bloomberg return on capital methodology S&P Industrials data not available for 4Q 2003

Boeing and Alcoa translates into increased range for the long-haul Boeing airliner. The latest and longest-range version of Boeing’s 777® airliner features wing The 777-300ER wing uses three large panels produced with Alcoa’s 2324-T39 underwing panels manufactured with Type 2 aluminum alloy. this latest Alcoa alloy. The alloy’s strength, combined with heat-treatment Using this alloy in its first production and stretching used in the production application, Boeing maximizes the process, enable the panels to be 777-300ER’s performance as a result thinner while still providing the support of Alcoa’s extensive metallics experi- needed for the aircraft’s massive wing ence. The 2324-T39 Type 2 alloy pro- structure. vides important weight savings, which With a maximum range of 7,705 nautical miles, the 777-300ER can fly non-stop between such destinations as New York-Tokyo, Johannesburg-London, and Frankfurt-Singapore.

43 Cash from Capital ■ Capital Expenditures Positioning for Growth — LME 1 ■ Depreciation A Strong Balance Sheet Operations (US dollars Expenditures Capital Expenditures (millions of US dollars) per metric ton) (millions of US dollars) % of Depreciation A strong balance sheet — reflected in 0 1,000 2,000 0 50 100 150 terms of the relationship between 1,104 2000 2,851 2000 debt and total capitalization — is 1,003 1,172 crucial to enabling profitable growth 2001 2,411 2001 1,004 through both the general economic 1,264 2002 and aluminum cycles. Alcoa’s target 2002 1,839 1,044 863 debt-to-total capitalization is defined 2003 1,110 as between 25% and 35%. 2003 2,430 0 500 1,000 1,500 0 1,000 2,000 3,000 In 2003, Alcoa made significant 1Average three-month aluminum price on the progress in strengthening its balance London Metal Exchange sheet, moving debt-to-total capitaliza- tion from 43.1% as of the end of Working ■ Working Capital1 Debt as a Percent of Invested Capital 2002 to 35.1% as of year-end 2003. ■ Revenue Capital Working Capital 2000 38.6 This was achieved by improved oper- (millions of US dollars) % of Revenue ating performance and cash from 04010 20 30 2001 35.8 operations, capital discipline resulting 3,959 2000 in lower capital expenditures, and 22,755 2002 43.1 3,192 2001 greater working capital efficiency cou- 22,576 pled with rising shareholder equity. 3,154 2003 35.1 2002 20,351 3,069 01020304050 2003 21,504 Defined as (Short-term borrowings + Long-term debt, due within one year + Long-term debt, less amount 0 5,000 10,00015,000 20,000 25,000 due within one year) / (Short-term borrowings + Long-term debt, due within one year + Long-term 1Defined as Receivables from customers, less debt, less amount due within one year + Minority allowances + Inventories – Accounts payable, trade interests + Total shareholders’ equity).

years in a row. So, when Ford began Alcoa also supplies heat shields for work on its all-new 2004 Ford® F-150® the 2004 Ford F-150 to help manage pickup, it stood to reason they would be heat away from critical components. careful in whom they would choose to Alcoa’s automotive products featured be part of the project. on Ford trucks include closures panels, wiring harness and electrical Ford and Alcoa Alcoa worked with Ford to help engineer distribution systems, and aluminum and design a solution where Alcoa sup- Ford’s F-Series™ pickup trucks are the wheels. plies the aluminum sheet used for the most popular vehicles in the world. hoods of the new F-150 — the widest- Ford, F-Series and F-150 are trademarks of Ford The F-Series has been America’s best- Motor Company. width aluminum closure produced in the selling truck for 27 years and the North American automobile market … a country’s best-selling vehicle for 22 testament to Alcoa’s ability to meet the supply challenges associated with America’s highest-volume vehicle.

44 Economic Performance Indicators

Cash Interest Paid partnerships, and moved forward ance sheet. We are on track to com- (millions of US dollars) with the expansion and repositioning plete the portfolio restructuring pro- 2000 388 of our global refining, smelting, and gram in the first half of 2004. energy generation systems. During 2001 418 In August 2003, we realigned our the year, we also completed two partnership with the Camargo small, bolt-on acquisitions in the 2002 329 Correa Group, acquiring the remain- packaging and building and construc- ing 40.9% shareholding in our South 2003 352 tion markets. American operations in exchange for 0 100 200 300400 500 As part of the portfolio restructuring 17.8 million shares of Alcoa com- program, our Latin American PET mon stock, with an agreed value of Our strong balance sheet has business and our investment in the approximately US$410 million. This allowed us to retain an investment Latin American aluminum can busi- transaction increases our stake in grade rating with major agencies, ness (LATASA) were successfully one of the lowest-cost, integrated such as Standard & Poor’s (S&P) divested in 2003. We also reached power generating, refining, and and Moody’s, for more than 26 agreement for the sale of the smelting facilities in the world. years. As of the end of 2003, we are Specialty Chemicals business, which rated “A-” by S&P and “A2” by In August, we also announced the is expected to close in the first quar- Moody’s. realignment of our alliance with ter of 2004. In January 2004, we sold Kobe Steel Ltd. (Kobe) of Japan. our packaging equipment business. Acquisitions, Expansions, This alliance, which was initially and Divestitures — These divestitures help bring focus to formed in 1992, involved joint ven- A Platform for Growth our portfolio and strengthen our bal- tures in the development of alu- In 2003, we successfully progressed minum products for automotive on our portfolio restructuring pro- applications as well as in the manu- gram announced in January 2003, facture of can sheet. Alcoa and Kobe realigned two of our international

China and Alcoa experience, expertise, and its ability to deliver, in short lead times, Reynolux, The Nanjing Olympic Sports Centre, in a unique prepainted product from Jiangsu province, China, will be the Alcoa that uses coil-coating techniques main stadium for the 10th National to enable one or more coats of paint to Games in 2005 and is to become the be applied. Reynolux is known the largest sports architectural complex — gymnasium, swimming stadium, tennis world over as an excellent multipur- with the most comprehensive center, news center, and auxiliary proj- pose material for roofing, façade functions — before Beijing hosts the ects, such as communications, engineer- cladding, and many indoor and out- 2008 Olympic Games. ing, and energy centers. door uses. It provides exceptional Occupying a total of 89.6 hectares of The designers of this state-of-the-art resistance against UV light and protec- land, with 400,000 square meters of facility, HOK Sport + Venue + Event, the tion against weathering for high dura- floor area, the Nanjing Olympic Sports world’s leading public assembly design bility and long life expectancy. The Centre will feature a main stadium, firm, sought to create an exceptional optimal adherence of its paint allows facility worthy of being at the center of the Reynolux product to be bent into the world stage. For part of the roofing of many complex shapes. the massive project, they tapped Alcoa Europe Building and Construction for its

45 will now broaden their cooperation and embarked on a feasibility study shareholding in Chalco which is the in the automotive market but discon- on a smelter project in Brunei. sole producer of alumina and the tinue their association in the KAAL largest producer of primary alu- In alumina production, the 250,000- can sheet joint ventures. Alcoa has, minum in China — the fastest grow- metric-ton expansion at the Jamalco therefore, acquired from Kobe the ing market for aluminum in the alumina refinery was completed in remaining 50% interest in the KAAL world. 2003, and production will com- Australia can sheet business and mence ahead of schedule. We contin- Cost Savings Initiatives — remaining 20% interest in the KAAL ue to take measures to strengthen Drive for Productivity Asia distribution business. In turn, our leadership position in global alu- In December 2003, we completed Kobe has purchased a 47% interest mina and have announced major and exceeded by US$12 million a in the KAAL Japan can sheet busi- brownfield expansion projects at three-year US$1.0 billion cost chal- ness from Alcoa. facilities in Pinjarra (Australia) and lenge. This was the second three-year In 2003, we received final approval Suriname. cost challenge over the past six to embark upon the construction of In energy generation, we continued years. The first one, covering the a $1.1 billion, 322,000-metric-ton- our investment program to increase 1998 to 2000 period, targeted per-year smelter in East Iceland. This our renewable self-generated energy US$1.1 billion in annual costs. These low-cost, greenfield smelter is sched- sources. In Brazil, the Machadinho cost savings are sustainable in uled to begin production in 2007. To hydroelectric project was completed nature, excluding components such further enhance our low-cost posi- in 2002, and the construction of the as energy and currency. We will con- tion in primary metals, we signed a Barra Grande generating facility pro- tinue to widen the application of the memorandum of understanding on a gressed in 2003. Alcoa Business System throughout low-cost smelter project in Bahrain the company in a continuous effort In January 2004, we acquired an to drive down costs. additional 44 million shares in Aluminum Corporation of China’s (Chalco) new share placement. This purchase will maintain Alcoa’s 8%

Addressing Employee, additional funding for outplacement support employee base decline from 700 to 400 Community Needs During services for all displaced employees. in 2003. Before the reduction, Alcoa established a partnership committee Plant Transitions An Alcoa smelter located in Wenatchee with state agencies, union members, When Alcoa needs to close, idle, or has been idle since 2001. About 400 Intalco management, and community curtail work at one of its facilities for employees at the Wenatchee Works con- education representatives to identify competitive reasons, the company tinue to receive a regular wage and bene- employee needs and plan and imple- works to help minimize adverse effects fits, coming to work on a full-time schedule. ment action plans for those who would on the surrounding community and If there is not sufficient upkeep work at the be displaced. The state organizations maximize opportunities for each Alcoan plant site, employees are paid to work on are providing comprehensive outplace- affected by the situation. Three facili- volunteer assignments in the community, ment services, and federal assistance ties in the state of Washington (USA) engage in health and fitness programs, is providing training and support lasting provide examples of this work. and pursue educational opportunities with up to two years per person. local community colleges and adult educa- In the months before closing its tion programs. By year’s end 2003, the In each of these three communities, Northwest Alloys smelter in Addy, Alcoa facility’s employees had contributed more Alcoa Foundation continued to provide applied for and received federal assis- support for established community than 80,000 hours of community service. tance to provide up to two years of finan- engagement as well as Alcoan volun- cial support and retraining for the facili- Alcoa Intalco Works, an aluminum smelter teer efforts through ACTION and ty’s 325 employees. Alcoa also provided in Ferndale, Washington (USA), saw its Bravo! grants. 46 Economic Performance Indicators

CUSTOMERS Alcoa serves customers across an tion of customer service and rela- In 2003, Alcoa generated revenues of array of markets. Our products and tionships. This role will spearhead US$21.5 billion in 41 countries. This components are used worldwide in the efforts that are currently being represents a compounded annual aircraft, automobiles, beverage cans, made by our different Market Sector sales growth of 9% over the last 10 buildings, chemicals, sports and Lead Teams in developing industry, years and 7% over the most recent recreation, and a wide variety of market segment, and specific cus- five years. The growth rate over the industrial and consumer applica- tomer strategies by working across last 10 years in global primary alu- tions. At every level in the organiza- all of Alcoa’s multiple businesses. minum consumption was approxi- tion, we seek to strengthen our rela- Our objective is to exceed customer mately 4% per year, as estimated by tionship with our existing customers expectations in quality, delivery, CRU Group. while developing new ones. and service. We work closely with many of our Sales LME 1 2003 Revenue Share by Market (billions of US dollars) (US dollars per metric ton) customers, leveraging our knowledge Industrial Products & Other 13% 0 1,000 2,000 3,000 of our products to develop applica- tions that generate value to them Aluminum & Alumina 24% 2000 22.8 Automotive 13% and their customers. Supporting Building & Construction 10% 2001 22.6 this objective, Alcoa created a new Aerospace 10% role of chief customer officer in Packaging & Consumer 25% Commercial Transportation 5% 2002 20.4 2003 to lead the strategic co-ordina-

2002 21.5

051015 20 25 1Average three-month aluminum price on the London Metal Exchange Please see endnote on page 49 for an explanation on data changes from 2002 reporting.

Nestlé and Alcoa Graphic Systems, which implements pre-press graphics work prior to the ® When it comes to Nestlé — the printing and development of packag- world’s largest food company, based in ing. Alcoa Closure Systems also pro- Vevey, Switzerland — Alcoa business- vides closures to a wide range of ® es, from Southern Graphic Systems Nestlé Coffeemate , Nestlé Baking Nestlé beverage brands, including and Alcoa Flexible Packaging to Alcoa Chocolates — not to mention pet foods Poland Spring®. Aluminio in South America and Alcoa like Purina® Whisker Lickin’s® and Leche Closure Systems International, work Moustaches® — feature shrink-sleeve In all, Alcoa packaging businesses closely together to ensure Nestlé’s labels, foil packaging, and foil/paper add impact to dozens of Nestlé prod- vast array of brands look their best. overwraps from Alcoa Flexible ucts … in practically every one of the Packaging and Alcoa Aluminio for con- more than 100 countries in which Household names the world over such sumer eye appeal to help drive growth. Nestlé operates. as Nestlé Nesquik®, Nestlé Maggi®, Nestlé frozen food brands such as Lean Cuisine®, Skillet Sensations™‚ and numerous ice cream products, in addi- tion to a wide range of confections, are helped to market by Alcoa’s Southern

47 Revenues by Market (percent) a sizeable component of the national Packaging & Aluminum & Industrial Automotive Building & Aerospace Commercial GDP of these countries. We recognize Consumer Alumina Products Construction Transportation & Other our role and the responsibilities of 2000 20 26 21 11 11 6 5 good corporate citizenship in every 2001 22 24 19 11 11 9 4 one of the countries in which we 2002 25 25 15 13 11 7 4 operate. 2003 25 24 13 13 10 10 5 1Alcoa has a refinery and two bauxite mines in Suriname that are owned 45% by BHP Billiton Revenues by Segment (billions of US dollars) and 55% by Suriname Aluminum Company Alumina & Primary Flat-rolled Engineered Packaging & Other Total L.L.C. [part of the Alcoa World Alumina and Chemicals Metals Products Products Consumer Chemicals (AWAC) group of companies and 2000 2.1 3.7 5.4 5.5 2.0 4.1 22.8 therefore owned 60% by Alcoa and 40% by 2001 2.0 3.4 5.0 5.9 2.6 3.7 22.6 Alumina Ltd.]. The Suriname Aluminum 2002 1.8 3.2 4.6 5.2 2.8 2.8 20.4 Company L.L.C also owns a hydro-electric dam. 2003 2.0 3.2 4.8 5.6 3.2 2.7 21.5 2Alcoa has a refinery and bauxite mine in Please see endnote on page 49 for an explanation on data changes from 2002 reporting. Jamaica, which are owned 50% by Clarendon Alumina Production, Ltd. (a wholly owned Revenues by Region (percent) subsidiary of the Government of Jamaica) and North America Europe Other Americas Pacific 50% by Alcoa Minerals of Jamaica L.L.C. 2000 69 17 5 9 (part of the AWAC group of companies). 2001 68 20 5 7 2002 67 21 4 8 2003 64 22 4 10

Countries with Significant context of the overall scale of eco- Alcoa Participation in the nomic activity in these economies. In Local Economy two countries in particular — Alcoa has operations in 41 countries Suriname1 (see case study below) and (as of December 31, 2003) with Jamaica2 — we participate in joint varying significance within the ventures whose operations represent

Alcoa in Suriname contributions included US$21 million spent for roughly 520 contractors, miscellaneous Suralco employees help garden at Alcoa strengthens local and national supplies from local vendors, and medical Diakonesse Hospital. economies through well-paying jobs, specialists. The company also bought taxes paid, and local purchases. This about US$55 million in oil from the State Suralco makes these contributions to the presence also often results in infra- Oil Company and paid nearly US$20 mil- Suriname economy while living Alcoa’s structure improvements, community lion in taxes. In addition, Suralco produces Values. In 2003, Suralco’s refinery contributions, health care advances, about 75 megawatts of electricity for the earned the International Aluminum and educational opportunities — all key Suriname government — roughly 75% of Institute’s “Best Safety Performance in to sustainable development. the electricity needs of the country’s capital the World” award. Its Moengo mining A good example is Suriname Aluminum city of Paramaribo. operation was also recognized as among the four best safety performers in the Company (Suralco). In 2002, Suralco But Alcoa’s involvement went further. bauxite and alumina industry category. accounted for roughly 15% of Suralco provided approximately Suriname’s gross domestic product — US$276,000 in scholarships for children of In 2003, Alcoa announced a US$65 mil- more if multiplier effects are taken into its employees. Alcoa Foundation also pro- lion, 250,000-metric-ton expansion to its account. The company employed vided nearly US$200,000 in grants for Paranam alumina refinery in Suriname. 1,188 full-time equivalent employees, improvement projects in education, the envi- This expansion, which will increase and payroll totaled nearly US$22 mil- ronment, and health services. Alcoa grants capacity by approximately 12%, is lion. Suralco also provided more than were also used to promote entrepreneurship expected to be completed by mid-2005. 48 US$13 million in pension payments to among the indigenous Amerinds and semi- Alcoa continues to explore additional former employees. Other economic indigenous Maroon populations. development opportunities in the country. Economic Performance Indicators

SUPPLIER RELATIONSHIPS These requirements are specified in Endnote We spent US$18.6 billion in operat- our standard purchase order terms Alcoa’s financial statements in both ing costs (cost of goods sold; selling, and conditions as well as the stan- 2003 and 2002 were significantly impacted by activities relating to the general administrative, and other dard Alcoa construction contract. Further details can be found on our planned divestiture of a number of expenses; and research and develop- Alcoa’s businesses. During the fourth Supplier Connection on alcoa.com. ment expenses) in 2003. While a quarter of 2002, Alcoa performed a sizeable proportion of this total is in Supplier diversity standards are in portfolio review of its businesses and metal purchases, energy, and development and are scheduled to be the markets they serve. As a result of this review, Alcoa committed to a plan employee salaries and benefits, we completed and deployed within 12 to divest certain non-core businesses also spend significant amounts on months. that did not meet internal growth and other goods and services. return measures. In accordance with the While no one supplier represents PUBLIC COMMITMENT accounting requirements, these busi- nesses were classified as either discon- more than 10% of the dollar value In addition to our extensive commu- tinued operations or assets held for of total goods and services we pur- nity engagement (see page 36), we sale. During 2003, there were a number chased in 2003, we have procure- make tax payments to governments of changes to these classifications of ment relationships with a wide range in all the countries in which we businesses that were to be divested. of suppliers in many countries. operate. In 2003, we paid income These changes in classification have necessitated a reclassification of certain Working closely with these suppliers taxes of US$303 million. This amounts in the economic section of the helps us in developing the highest excludes the numerous other taxes, 2003 Sustainability Report to conform quality, cost-effective products for such as royalties, sales taxes, excise to the 2003 financial presentation. For our customers. duties, levies, and local taxes, that details on Alcoa’s accounting policies and the classification of discontinued Our relationship and conduct with we paid in those countries. operations and assets held for sale, our suppliers is guided by the princi- Cash Paid for Income Taxes please refer to Notes A and B of the ples outlined in our Guide to (millions of US dollars) Consolidated Financial Statements in Business Conduct. We expect our 2000 419 the 2003 Annual Report. suppliers to support our values, and supplier audits are conducted, as 2001 548 deemed necessary, by Alcoa operat- 2002 583 ing businesses.

Suppliers are also required to follow 2003 303 our environmental and safety 0 100 200 300 400500 600 requirement when at one of our sites, and all suppliers are required Effective Tax Rate (percent) to follow our equal opportunity requirements and expectations. 2000 33.5

2001 31.9

2002 32.3

2003 24.2

010203040

49 Awards and Recognition INTERNAL AWARDS AND RECOGNITION Global Leadership Awards The Global Leadership Awards were initiated in 1999 as a way to recognize Alcoa businesses for outstanding results in support of Alcoa’s values and major initiatives. The awards are linked to our business strategy, and there are defined criteria for each award. The following awards were given in January 2004 for exceptional performance in the year 2003.

Chairman’s Award Alcoa Primary Metals Best Deployment of Alcoa Business System Alcoa Home Exteriors Best Customer Excellence Alcoa Closure Systems International Best Marketing Excellence Alcoa Latin America Primary Products Best People Excellence Alcoa Fujikura Limited — Automotive Best Resource Unit Excellence Global Business Services Procurement Best Community Engagement Alcoa Rigid Packaging Best Rapid Technology Deployment Alcoa World Alumina Best Process Quality Excellence Alcoa Closure Systems International Best Large Business Unit Financial Performance Alcoa Fujikura Limited — Automotive Best Small Business Unit Financial Performance Alcoa Europe Building and Construction Systems Best Environment, Health, and Safety Performance Alcoa World Alumina Atlantic Best Improved Environment, Health, and Safety Performance Alcoa Rigid Packaging Best Overall Audit Performance Alcoa Materials Management

EHS Achievement Awards EHS Achievement Awards are earned by business units, locations, teams, or individuals. They are based on submitted nominations and selected by a jury of experts.

Casthouse Mechanical Craftsmen Project Alcoa/Aluminerie de Becancour Inc. — Canada Packing Automation Cressona, Pennsylvania — USA The Alcoa Schools Safety Initiative Pinjarra — Australia Ergonomics in Howmet Castings: EHS Challenge — EHS Success/Manufacturing Challenge — Manufacturing Success All Howmet Locations Safety Kaizen Events to Reduce Injuries Howmet Castings Improved Safety Performance Portovesme — Italy Tennessee Primary Metals and Potroom Safety Improvement Tennessee Operations — USA Injury Reduction in Alcoa Automotive Alcoa Automotive

Health Promotion/Employee Assistance Program Alcoa-Köfém KFT — Hungary

50 Awards and Recognition

EHS Achievement Awards (continued)

Instituting Worker Health Protection … More Effectively, More Quickly and at Lower Cost All Howmet Locations Smokers’ Support Program at Cenesp Sao Paulo Office — Brazil Waste Elimination Through Ultrafiltration Sidney, Ohio — USA Pollution Prevention Plan/Program Hampton Howmet Casting — USA Minimizing Our Footprint Lafayette, Indiana — USA Waste Minimization Strategy: Improving Business Sustainability Alumar Sao Luis — Brazil Itapissuma’s Voluntary Reduction of Solid Waste Footprint Itapissuma — Brazil Anode Effects Greenhouse Gas Reduction Aluminerie de Becancour Inc. — Canada Quantum Leap in E-awareness Harderwijk — The Netherlands Tubarao Waste Helps Reduce Environmental Problem in Santa Catarina State Tubarao — Brazil Dynamic Rainwater Management Deschambault Smelter Plant — Canada Chrome Free Aluminum Surface Treatment Technology Warrick Operations — USA Environmental Awareness Promotion Program at Primary Schools Alcoa-Köfém KFT — Hungary Environmental Education in the Southwest Resource Kit Portland — Australia Bus Bar Retrofit Portland — Australia Soda Waste Minimization Through Keeping Dies With Aluminum Noblejas — Spain Preheat Furnace Energy Efficiency Improvement Warrick Operations — USA Hot Dross Processing Tennessee Operations — USA Alcoa Energy Efficiency Network Knoxville — USA

Alcoa Corporate ence in the conception, development, ● The Francis C. Frary Award for a Technology Awards and application of science and tech- lifetime of outstanding individual The Alcoa Corporate Technology nology across our global operations. contributions to Alcoa science and Awards honor the company’s finest Our deep capabilities in research, technology — Dr. G. Keith scientists and engineers for creativity, development, and applied engineer- Turnbull, retired executive vice teamwork, leadership, and persist- ing are some of the key ways we president, Alcoa Business System, deliver solutions to our customers. Pittsburgh, Pennsylvania (USA). The awards acknowledge individual and team contributions, and the 2003 recipients are the following:

51 ● The Alcoa Chairman’s Award for Corporate Audit Awards significant individual contributions These awards recognize Alcoa businesses that demonstrate the best process to innovation, development and controls as evidenced by 2003 audits, as well as those locations and/or implementation of materials pro- business units (BUs) that have achieved significant process improvement over cessing and systems technologies their last audit results. — Dr. Dhruba J. Chakrabarti, senior technical specialist, Alcoa Group BU Audit Performance Technical Center, Alcoa Center, Financial & Business Processes Primary Products Pennsylvania (USA); and Dr. Information Technology Gerald I. D. Roach, technical man- Environment, Health & Safety ager, extraction technology, Alcoa World Alumina, Kwinana, Western BU Audit Performance Australia. Financial & Business Processes Alcoa Materials Management ● The I.W. “Chief” Wilson Award Information Technology Global Business Services (GBS) for outstanding leadership in the Most Improved BU management of science and tech- Environmental, Health & Safety Southern Graphic Systems nology throughout Alcoa — Robert C. Pahl, director of appli- Most Improved Location cation engineering and process Environmental, Health & Safety Alcoa Trasformizioni Srl. — Fusina, Italy development, Alcoa Extruded Alcoa Australia Rolled Products — Products — Aerospace, Lafayette, Yennora Indiana (USA); and Jerry L. Roddy, director of technology, Certificates of Audit Excellence Primary Metals, Knoxville, Financial & Business Processes Alcoa Materials Management Tennessee (USA). Australia Treasury GBS Procurement — IT and Services ● The Arthur Vining Davis Award GBS Procurement — for outstanding team achievement Solutions and Leveraged Buy in Alcoa science and technology — The Dura-Bright® Surface Environmental, Health & Safety Aluminerie de Deschambault Treatment Team, Alcoa Wheel and Alcoa Aluminio Poços de Caldas Forged Products, Cleveland, Ohio Environment Mt. Holly — South Carolina, USA (USA); and The Release™ Non- Stick Aluminum Foil Team, Alcoa First-time Audit Achievement Consumer Products, Richmond, For successful integration of new Alcoa KAMA Virginia (USA). locations with a 100% pass rate Alcoa Flexible Packaging for first-time audits.

52 Awards and Recognition

EXTERNAL AWARDS AND RECOGNITION The following is a partial listing of the awards and recognition Alcoa earned from external organizations in 2003.

Integrated

Dow Jones Sustainability Index Alcoa Most Admired Companies — Fortune Magazine Alcoa (first in metals category)

Environmental, Health, and Safety Australia Prime Minister’s Award for Excellence in Community Alcoa World Alumina Australia and Business Partnerships Greening Australia Model Project Award — Society for Ecological Restoration International Alcoa World Alumina Australia MINEX Safety and Health Excellence Award — Western Australia Mining — Minerals Council of Australia Alcoa World Alumina Australia

Alcoa Earns Australian The partnership has contributed in a prac- Community members inspect native tical way to repair the Australian land- Prime Minister’s Award grasses at an Alcoa-sponsored landcare scape. The Alcoa Revegetation Assistance education center. A 21-year partnership between Alcoa program in Victoria, which gives farmers World Alumina Australia and Greening and landcare groups access to direct- knowledge to support direct-seeding Australia to protect and restore the health, seeding machinery and equipment, has activities. Alcoa has also helped provide diversity, and productivity of the country’s resulted in the establishment of more than practical knowledge transfer by support- unique landscape earned a 2003 Prime 700 Alcoa landcare sites, the planting of ing publications and resources for land- Minister’s Award for Excellence in around 10 million trees and shrubs, and holders and rural and urban audiences. Community Business Partnerships. the effective treatment of thousands of hectares of degraded land. “Our partnership with Alcoa is enduring, “Alcoa has made an unprecedented con- changing to suit today’s needs and is a tribution to rural and regional Australia Grow Us a Home, a 10-year environmen- fine example of how collaboration can through their support of Greening tal education program in Perth and Peel, is result in excellent outcomes for all,” Australia and the landcare movement,” estimated to have raised the level of envi- said Binning. said Carl Binning, chief executive officer ronmental awareness of 40,000 people of Greening Australia. “It’s imperative through the involvement of teachers, par- The partnership is part of Alcoa’s National that we partner with the business sector, ents, and students. The Alcoa Portland Landcare Program, which has injected government, and community to address seedbank collects and stores seeds from US$14.8 million into landscape restora- the extensive environmental issues we indigenous plants for use in revegetation tion, education, and knowledge sharing face in Australia.” projects and provides advice and technical across Australia over the past 15 years. 53 Environmental, Health, and Safety (continued)

Canada Waste Minimization Performance Attestation — Aluminerie de Becancour and Recyc-Québec Aluminerie Deschambault Phénix de l’environnement Award for Know-how in Sustainable Development (Use of processes/technologies) Aluminerie de Bécancour Inc., Quebec

Europe Quality and Environment Award — Toledo Chamber of Commerce Alcoa Transformacion S.A. — Noblejas, Spain

Japan Special Excellence Prize for Safety — Japan Aluminum Association KAAL Japan

South America Annual Safety Contest Performance Prize — Brazilian Association for Accident Prevention AFL do Brasil Ltda. D. Pedro II Merit Medal — Minas Gerais Military General Fire Fighters Command Alcoa Aluminio — Poços de Caldas, Brazil Best Safety Performance in the World — International Aluminum Institute Suralco Refinery, Suriname

United States Business of the Year — Evansville Operation City Beautiful Alcoa Warrick Operations, Indiana John Biasini Environmental Excellence Award for Energy/Renewable Resources — Metropolitan Evansville Chamber of Commerce Alcoa Warrick Operations, Indiana John Biasini Environmental Excellence Award for Land Use — Metropolitan Evansville Chamber of Commerce Alcoa Warrick Operations, Indiana Governor’s Award for Environmental Excellence — Virginia Manufacturing Association and the Commonwealth of Virginia Howmet Castings — Hampton, Virginia Pretreatment Award — Kentucky-Tennessee Water Environment Association Tennessee Operations Return on Environment™ Partnership Award — GE Betz Alcoa Mill Products — Lancaster, Pennsylvania Pollution Prevention P2 Award — Hampton Roads Sanitation District (Commonwealth of Virginia) Howmet Castings — Hampton, Virginia

54 Awards and Recognition

Environmental, Health, and Safety (continued)

United States Award of Excellence in Recognition of Exceptional Workplace Safety in 2002 — Georgia Department of Labor Alcoa Cladding Systems — Eastman, Georgia Environmental Stewardship Award — Bio Diesel Promotion Board and the Iowa Soybean Promotion Board Alcoa Davenport, Iowa A Star Among Stars Award — U.S. Occupational Safety & Health Administration Rockdale Power Plant, Texas Palmetto Safety Excellence Award — South Carolina Alcoa Fujikura Ltd. Telecommunications — Occupational Safety Council Ridgeview, South Carolina South Carolina Safety Certificate — South Carolina Alcoa Fujikura Ltd. Telecommunications — Occupational Safety Council Hillside, South Carolina Safety Achievement Award — Metro Indianapolis Coalition for Construction Safety Lafayette Operations, Indiana

Social

Good Corporate Citizenship and Social Responsibility Award — Figyelö Magazine Alcoa-Köfem, Hungary 2002 Award for Social Commitment and Employment Creation — Province of Lugo Business Federation Alcoa San Ciprián — Brazil Voluntarios das Gerais — State of Minas Gerais FIEMG and SESI Minas AFL Brazil Paul Harris Fellow Commendation — Rotary Club AFL Brazil Itajuba-Oeste 2002 Wisconsin Manufacturer of the Year Community Alcoa Wheel and Forged Products — Commitment Grand Award — Wisconsin Manufacturers Beloit, Wisconsin (USA) and Commerce

Economic

Best New Non-food Specialty Item — Alcoa Consumer Products (Reynolds Wrap® Kosherfest New Product Competition Release® Non-Stick Aluminum Foil) 2003 IIASA-Shiba Award — International Institute for Applied System Analysis Alcoa Wheel & Forged Products, Hungary 2003 Visionary Award — Smart Business Network and Anthem Blue Cross and Blue Shield of Ohio Alcoa Wheel and Forged Products Silver Packaging Award — Dupont Packing Awards Alcoa Flexible Packaging (Sure-Peel™ Cohesive Lidding)

55 Economic (continued)

R&D 100 Award — R&D Magazine AFL Telecommunications 2003 Category Colonel Award — PLBuyer Magazine Reynolds Consumer Products and Presto Products 2002 Most Valuable Product Award — RoadStar Magazine Alcoa Wheel and Forged Products (Dura-Bright® Wheels) Volkswagen Group Award — Volkswagen of Mexico AFL Automotive Top 50 Supplier — Automotive Industries Magazine Quest for Excellence Survey Alcoa Preferred Supplier Award — PACCAR AFL Automotive Best Product Development Team Stevie Award — Alcoa Consumer Products (Reynolds Wrap® Release® American Business Awards Non-Stick Aluminum Foil) 2002 President’s Awards — Subaru AFL Automotive Nifty Fifty Award — Heavy Duty Trucking Magazine Alcoa Wheel and Forged Products (Dura-Bright® Wheels) 2003 Carnegie Science Center Award for Excellence in the Advanced Manufacturing and Materials Category Dr. Ming Li, Alcoa Technical Center Top 10 of 1,200 World Brands — Harris Interactive® Alcoa Consumer Products (Reynolds Wrap® Quality Survey Aluminum Foil)

56 Case Studies

The following case studies, which can be found throughout the 2003 Sustainability Report, illustrate how Alcoa is acting upon its commitment to sustainable development throughout the world.

Environmental Ten Million Trees ...... 3 Alumar Ranked Best in World for Health, Safety, Environment, and Community...... 12 A Personal Look at Community Consultation...... 14 Helping NGOs Become More Viable and Sustainable ...... 15 Returning Wasteland to Nature...... 16 The Challenge of Hydropower in Iceland...... 18 Investments Reduce Process Water Discharge by 96% ...... 19 Alcoa Frog Watch...... 20 Wetlands Project Engages Community ...... 21 Moving Beyond Current Reduction Targets for Greenhouse Gases ...... 22 Production Up, Emissions Down in Smelter Project ...... 24 Recycling the Previously Unrecyclable...... 25 Customer Need Drives Brazilian Recycling Solution ...... 26 Alcoa Signs Clean Air Settlement in Texas ...... 27 Earthwatch Expeditions: Partnerships in Conservation ...... 29 Alcoa Earns Australian Prime Minister’s Award...... 53

Social Alcoa Women’s Network...... 28 Achieving Sustainability Through Leadership...... 30 Lowering Workplace Exposures to Hexavalent Chromium ...... 31 Safety in Suriname...... 33 Building Stronger Communities in Australia ...... 36 Helping Communities Cope with Emergencies ...... 37 Taking Action — Alcoa’s Worldwide Week of Community Service ...... 39 Addressing Employee, Community Needs During Plant Transitions...... 46

Economic Bringing Social Responsibility to the Supply Chain ...... 35 Airbus and Alcoa...... 42 Boeing and Alcoa ...... 43 Ford and Alcoa...... 44 China and Alcoa...... 45 Nestle and Alcoa ...... 47 Alcoa in Suriname ...... 48

57 GRI Content Index

This index was developed to help required information can be found in “Not disclosed” means that this interested readers compare the infor- the Sustainability Report and the information is either not collected mation in Alcoa’s Sustainability Report Annual report as well as the URLs on a global basis or kept confidential and Annual Report and on our web- for relevant information on for competitive or other reasons. site with the Global Reporting alcoa.com. “Partially reported” indi- “Not applicable” means that it Initiative guidelines. We also draw cates that we have provided a por- does not apply to our operations or upon criteria from other organizations tion of the information required. In 2003 reporting. to frame our sustainability reporting. a number of instances, we’re work- We have used the abbreviations SR for In the last column of the chart, we ing toward better data collection to Sustainability Report, AR for Annual have indicated what pages the more fully report this information. Report, and Web for alcoa.com.

GRI SECTION DESCRIPTION LOCATION

Vision and Strategy 1.1 Statement of the organization’s vision and strategy SR page 3 regarding its contribution to sustainable development. 1.2 Statement from the CEO describing key elements of the report. SR Preface

Profile 2.1 Name of reporting organization. SR page 6 2.2 Major products and/or services. SR page 6 2.3 Operational structure of the organization. Web http://www.alcoa.com/global/en/about_alcoa/listing.asp 2.4 Description of major divisions, operating companies, SR page 6 subsidiaries, and joint ventures. Web http://www.alcoa.com/global/en/about_alcoa/listing.asp 2.5 Countries in which the organization’s operations are located. SR page 6 2.6 Nature of ownership SR page 6 2.7 Nature of markets served. SR page 6 2.8 Scale of the reporting organization. SR page 6 (Key Statistics)

SR page 45 (Acquisitions)

AR Inside front cover 2.9 List of stakeholders. Partially Reported

SR page 14 2.10 Contact person. SR page 6 2.11 Reporting period. SR page 6 2.12 Date of most recent previous report. SR page 6 2.13 Boundaries of report. SR page 6 2.14 Significant changes since previous report. SR page 45

58 GRI Content Index

GRI SECTION DESCRIPTION LOCATION 2.15 Basis for reporting on joint ventures, partially owned subsidiaries, etc. SR page 6 2.16 Explanation of the nature and effect of any re-statements Provided as footnotes to individual SR charts of information provided in earlier reports. where data changed. 2.17 Decisions not to apply GRI principles or protocols in the SR page 58 preparation of the report. 2.18 Criteria/definitions used in any accounting for economic, Partially Reported environmental, and social costs and benefits. SR page 7

AR page 46

2.19 Significant changes from previous years in the measurement methods. Not Applicable 2.20 Policies and internal practices to enhance and provide SR page 7 assurance about the accuracy, completeness, and reliability that can be placed on the sustainability report. 2.21 Policy and current practice with regard to providing SR page 7 independent assurance for the full report. 2.22 Means by which report users can obtain additional information and reports. SR page 7

Governance Structure and Management Systems 3.1 Governance structure. SR page 8 3.2 Percentage of the board of directors that are independent, non-executive. SR page 9 3.3 Process for determining the expertise board members Web need to guide the strategic direction of the organization. http://www.alcoa.com/global/en/about_alcoa/ corp_gov/nominating.asp 3.4 Board-level processes for overseeing the organization’s Web identification and management of economic, environmental, http://www.alcoa.com/global/en/about_alcoa/ and social risks and opportunities. corp_gov/public_issues.asp 3.5 Linkage between executive compensation and achievement SR page 11 of the organization’s financial and non-financial goals. 3.6 Organizational structure and key individuals responsible SR page 12 for oversight, implementation, and audit of economic, (Audit Process) environmental, social, and related policies. SR page 8 (Structure and Governance)

SR page 9 (Public Issues Committee)

SR page 10 (Officers) 3.7 Mission and value statements, internally developed codes of conduct SR page 4 or principles, and policies related to economic, environmental, and social performance and the status of implementation. 3.8 Mechanisms for shareholders to provide recommendations SR page 13 or direction to the board of directors. 3.9 Basis for identification and selection of major stakeholders. SR page 14

59 GRI SECTION DESCRIPTION LOCATION 3.10 Approaches to stakeholder consultation. Partially Reported

SR page 14 (Stakeholder Consultation)

SR page 7 (Report Profile)

SR page 6 (Report Scope)

SR page 34 (Human Rights)

SR page 53 (Case study: Alcoa Earns Australian Prime Minister’s Award) 3.11 Type of information generated by stakeholder consultations. Partially Reported

SR page 14 (Stakeholder Consultation Outcomes)

SR page 7 (Report Profile) 3.12 Use of information resulting from stakeholder engagements. Partially Reported

SR page 14 (Stakeholder Consultation Outcomes)

SR page 7 (Report Profile) 3.13 Explanation of whether and how the precautionary approach Not Disclosed or principle is addressed by the organization. Through its extensive management systems, Alcoa advocates a risk-based approach to its operations. At this stage, however, we do not formally address the precautionary principle in our Sustainability Report. 3.14 Externally developed, voluntary economic, environmental, SR page 15 and social charters, sets of principles, or other initiatives to which the organization subscribes or which it endorses. 3.15 Principle memberships in industry and business associations, SR page 15 and/or national/international advocacy organizations. 3.16 Policies and/or systems for managing upstream and Partially Reported downstream impacts. SR page 35 (Case study: Bringing Social Responsibility to the Supply Chain) 3.17 Reporting organization’s approach to managing indirect economic, Partially Reported environmental, and social impacts resulting from its activities. SR page 48 3.18 Major decisions during the reporting period regarding the location SR page 45 of, or changes in, operations. 3.19 Programs and procedures pertaining to economic, environmental, SR page 15 and social performance.

60 GRI Content Index

GRI SECTION DESCRIPTION LOCATION 3.20 Status of certification pertaining to economic, environmental, Partially Reported and social management systems. SR page 15 (Certification Status)

SR page 6 (Alcoa Metrics System)

GRI Content Index 4.1 Table identifying the location of each element of the GRI report content. SR page 58

Performance Indicators — Economic

EC1 Net sales. SR page 47 EC2 Geographic breakdown of markets. Partially Reported SR page 48 EC3 Cost of all goods, materials, and services purchased. Partially Reported

SR page 49 EC4 Percentage of contracts that were paid in accordance with Not Disclosed agreed terms, excluding agreed penalty arrangements. Processes for collecting the data on a global level do not exist currently. EC5 Total payroll and benefits. Partially Reported SR page 29 EC6 Distributions to providers of capital. SR page 43 (Distributions to Shareholders) SR page 45 (Cash Interest Paid) EC7 Increase/decrease in retained earnings. AR page 45 EC8 Total sum of taxes of all types broken down by country. Partially Reported

SR page 49 EC9 Subsidies received broken down by country or region. Not Disclosed

While in some instances these data are commercially sensitive, more reporting of subsidies is occurring. Alcoa will keep this issue under review. EC10 Donations to community, civil society, and other groups SR page 36 broken down in terms of cash and in-kind donations per type of group. EC11 Supplier breakdown. SR page 49

Performance Indicators — Environmental EN1 Total materials use other than water. Partially Reported SR page 16 EN2 Percentage of materials used that are wastes from sources SR page 17 external to the reporting organization. EN3 Direct energy use segmented by primary source. SR page 17

61 GRI SECTION DESCRIPTION LOCATION EN4 Indirect energy use. Partially Reported

SR page 17 EN5 Total water use. SR page 19 EN6 Location and size of land owned, leased, or managed Partially Reported in biodiversity-rich habitats. SR page 20 EN7 Description of the major impacts on biodiversity associated with Partially Reported activities and/or products and services in terrestrial, freshwater, and marine environments. SR page 19

Web http://www.alcoa.com/global/en/environment/ position_papers/biodiversity.asp EN8 Greenhouse gas emissions. SR page 22 EN9 Use and emissions of ozone-depleting substances. SR page 22 EN10 NOx, SOx and other significant air emissions by type. SR page 23 EN11 Total amount of waste by type and destination. Partially Reported

SR page 24 EN12 Significant discharges to water by type. Partially Reported

SR page 25 EN13 Significant spills of chemicals, oils, and fuels in terms of total Partially Reported number and total volume. SR page 27 EN14 Significant environmental impacts of principal products and services. SR page 25 EN15 Percentage of the weight of products sold that is reclaimable Partially Reported at the end of the products’ useful life and percentage that is actually reclaimed. SR page 17 EN16 Incidents of and fines for non-compliance. Partially Reported

SR page 27 EN17 Initiatives to use renewable energy sources and to increase SR page 17 energy efficiency. EN23 Total amount of land owned, leased, or managed for production SR page 20 activities or extractive use. EN35 Total environmental expenditures by type. Partially Reported

SR page 27

Performance Indicators — Social LA1 Breakdown of workforce. Partially Reported

SR page 29 (Employees by Region)

SR page 29 (Improving Gender Balance)

62 GRI Content Index

GRI SECTION DESCRIPTION LOCATION LA2 Net employment creation and average turnover segmented Not Disclosed by region/country. Processes for collecting the data on a global level do not exist currently. LA3 Percentage of employees represented by independent trade Not Disclosed union organizations or other bona fide employee representatives. Processes for collecting the data on a global level do not exist currently. LA4 Policy and procedures involving information, consultation, and Not Disclosed negotiation with employees over changes in the reporting organization’s operations. Development of policy is planned. LA5 Practices on recording and notification of occupational accidents SR page 32 and diseases, and how they relate to the ILO Code of Practice on Recording and Notification of Occupational Accidents and Diseases. LA6 Description of formal joint health and safety committees comprising Partially Reported management and worker representatives and proportion of workforce covered by any such committees. SR page 32 LA7 Standard injury, lost day, and absentee rates and number of work- Partially Reported related fatalities (including subcontracted workers). SR page 34 LA8 Description of policies or programs (for the workplace and beyond) on HIV/AIDS. SR page 33 LA9 Average hours of training per year per employee by category of Not Disclosed employee. Deployment of a new learning management system will help with future collection of the data. There is a wide array of training available to Alcoa employees. That training includes health and safety, Alcoa Business System, diversity, and leadership training.

SR page 30 (Case study: Achieving Sustainability Through Leadership) LA10 Description of equal opportunity policies or programs, as well as Partially Reported monitoring systems to ensure compliance and results of monitoring. SR page 28 LA11 Composition of senior management and corporate governance bodies. Partially Reported

SR page 9 (Board Committees)

SR page 10 (Officers) HR1 Description of policies, guidelines, corporate structure, and procedures Partially Reported to deal with all aspects of human rights relevant to operations. SR page 34 HR2 Evidence of consideration of human rights impacts as part of Partially Reported investment and procurement decisions. Web http://www.alcoa.com/global/en/about_alcoa/ human_rights.asp HR3 Description of policies and procedures to evaluate and address Partially Reported human rights performance with the supply chain and contractors. SR page 35

63 GRI SECTION DESCRIPTION LOCATION HR4 Description of global policy and procedures/programs preventing Partially Reported all forms of discrimination in operations. SR page 34 HR5 Description of freedom of association policy and extent to which this Partially Reported policy is universally applied independent of local laws, as well as description of procedures/programs to address this issue. SR page 35 HR6 Description of policy excluding child labor as defined by ILO Convention Partially Reported 138 and extent to which this policy is visibly stated and applied, as well as description of procedures/programs to address this issue. SR page 34 HR7 Description of policy to prevent forced and compulsory labor and Partially Reported extent to which this policy is visibly stated and applied, as well as description of procedures/programs to address this issue. SR page 34 HR12 Description of policies, guidelines, and procedures to address the Partially Reported needs of indigenous people. SR page 35 (Relationships with Indigenous People)

SR page 28 (Equal Opportunity Statement)

SR page 28 (Diversity) SO1 Description of policy to manage impacts on communities in areas Partially Reported affected by activities, as well as description of procedures/ programs to address this issue. SR page 46 (Case study: Addressing Employee, Community Needs During Plant Transitions) SO2 Description of the policy, procedures/management systems, and Partially Reported compliance mechanisms for organizations and employees addressing bribery and corruption. SR page 40 (Bribery and Corruption)

SR page 4 (Vision, Values, and Principles)

SR page 13 (Ethics and Compliance Program) SO3 Description of policy, procedures/management systems, and compliance SR page 41 mechanisms for managing political lobbying and contributions. SO4 Awards received relevant to social, ethical, and environmental performance. SR page 50 PR1 Description of policy for preserving customer health and safety during use Partially Reported of products and services, and extent to which this policy is visibly stated and applied, as well as description of procedures/programs to address this issue. SR page 41 PR2 Description of policy, procedures/management systems, and Partially Reported compliance mechanisms related to product information and labeling. SR page 41 PR3 Description of policy, procedures/management systems, and Partially Reported compliance mechanisms for consumer privacy. SR page 41 Some GRI descriptions are edited for length. Reprinted with permission of the Global Reporting Initiative. For the complete Sustainability Reporting Guidelines, please visit www.globalreporting.org.

64 Feedback

Thank you for reading Alcoa's Sustainability Report. We believe that it is an important way to provide information to a broad spectrum of stakeholders. The report is intended to provide a clear view of what we do. If we can do this job better for you, we would like to hear your suggestions for improvements. Please help us by rating our report on a scale of 1 (poor) to 10 (excellent). 1. How would you rate the report’s structure in terms of finding information? ■ 1 ■ 2 ■ 3 ■ 4 ■ 5 ■ 6 ■ 7 ■ 8 ■ 9 ■ 10

2. How useful is the report to assess where Alcoa has made progress and where the company has more work to do in the areas of: Corporate Governance ■ 1 ■ 2 ■ 3 ■ 4 ■ 5 ■ 6 ■ 7 ■ 8 ■ 9 ■ 10 Environmental Progress ■ 1 ■ 2 ■ 3 ■ 4 ■ 5 ■ 6 ■ 7 ■ 8 ■ 9 ■ 10 Social Progress ■ 1 ■ 2 ■ 3 ■ 4 ■ 5 ■ 6 ■ 7 ■ 8 ■ 9 ■ 10 Financial Performance ■ 1 ■ 2 ■ 3 ■ 4 ■ 5 ■ 6 ■ 7 ■ 8 ■ 9 ■ 10

3. a) Compared to other sustainability reports, how do you rate the Alcoa Sustainability Report? ■ 1 ■ 2 ■ 3 ■ 4 ■ 5 ■ 6 ■ 7 ■ 8 ■ 9 ■ 10 b) Which company’s sustainability report did you like best? c) Why?

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Detach and Return 4. Rate the usefulness of the case studies in adding value to the information and data on Alcoa’s programs. ■ 1 ■ 2 ■ 3 ■ 4 ■ 5 ■ 6 ■ 7 ■ 8 ■ 9 ■ 10

5. a) What did you like best about the Alcoa report?

b) The report could be improved by:

6. Please specify your relationship to Alcoa: ■ Employed by Alcoa ■ Member of a non-governmental organization (NGO) ■ Shareholder ■ Member of a community where Alcoa has a presence ■ Customer ■ Other, please specify ■ Supplier

7. Where are you from? ■ Africa ■ Latin America ■ Australia ■ North America ■ Europe

Thank you for your feedback!

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