Adding More Aluminum Creating Value Sustainability Report 2014 1 Adding More, Creating Value Novelis Sustainability Report 2014 Overview Strategy Sourcing Manufacturing Customers Consumers About This Report Contents By adding high- 2 9 recycled-content Novelis aluminum Overview Strategy 3 Welcome 10 Pioneering a New to their products, 4 Letter from Our Chief Executive Officer Way of Doing 6 Performance Summary Business our customers are 7 About Novelis 16 Materiality creating value for 18 Stakeholder Engagement consumers – and 21 Sustainability Management and for the world. The 23 Governance following sections Sourcing explain how. 24 Re-engineering Our Supply Chain Adding More 30 67 Aluminum Manufacturing Consumers 31 Our Manufacturing Creating Value Operations 68 Engaging with 33 Our Environmental Consumers Performance 72 Product Safety 46 Developing Our and Health People 52 Engaging with Our Communities 73 60 About This Report Customers 74 The Global Reporting Initiative Index 61 Delivering Value to Our Customers 81 UNGC Communication 62 Sector Focus: Automotive on Progress Index 64 Sector Focus: Beverage Can 83 Awards and 66 Sector Focus: Specialties Recognitions 2 Adding More, Creating Value Novelis Sustainability Report 2014 Overview Strategy Sourcing Manufacturing Customers Consumers About This Report Welcome At Novelis, we have set an ambitious goal to use 80% recycled aluminum inputs in our operations by 2020. This goal is transforming our company and dramatically improving the sustainability profile of our products throughout their life cycle. This sustainability report, our fourth, reviews our We have aligned this report to conform to the new continued progress toward this goal – as well as G4 Sustainability Reporting Guidelines of the Global our other key targets – at each life cycle stage: Reporting Initiative (GRI) at the Comprehensive level. sourcing, manufacturing, customer use and Please see About This Report (p. 73) for an abbreviated end-of-life with consumers. GRI index and for more information about the report’s scope and boundaries. Sourcing Manufacturing Customers Consumers Reached In FY14, reduced Invested approx. Helping 46% recycled energy intensity $550 million consumers content by 5% and water since 2012 to reduce their by the use intensity triple our capacity carbon emissions. end of FY14 and absolute to serve the Accepted into GHG emissions auto industry WWF Climate by 4% each by 2015 Savers Program. 3 Adding More, Creating Value Novelis Sustainability Report 2014 Overview Strategy Sourcing Manufacturing Customers Consumers About This Report Letter from Our Chief Executive Officer To Our Stakeholders: At Novelis, we are relentlessly focused on achieving At the core of our company’s transformation is our our vision to lead our industry by producing the unprecedented target to use 80% recycled inputs by most innovative, technologically advanced, low- 2020, compared to 33% three years ago. This target has carbon aluminum flat rolled products on the market. implications for nearly every aspect of our business – Accomplishing this demands much more than business from the basic design of our products and our portfolio as usual. It requires us to pioneer a fundamentally mix, to the structure of our supply chain and our new way of thinking and operating. It also requires a relationships with our customers. But when we reach willingness to not only embrace disruption within our it, we will cut our absolute, life cycle greenhouse gas own company, but also to create it in our industry and emissions in half, even with significantly increased the markets we serve. production, and achieve our objective to be the low-carbon aluminum producer. This new way of operating entails shifting our business model from a traditional linear approach to an Another key component of our transformation is increasingly closed-loop one. This shift will enable us to a dramatic expansion of our capacity to serve the accelerate and capitalize on the sustainability potential automotive industry, the fastest-growing market for of aluminum as a lightweight, infinitely recyclable metal our products, as automakers increasingly turn to – and to dramatically reduce the embedded carbon aluminum to lightweight their vehicles. When our latest in our products. It demands we apply our industry- projects come online, our automotive sheet capacity leading research and technology capabilities to create will reach 900 kilotons annually – a three-fold increase the product innovations needed to close the loop. And, in just two years. in an increasingly energy- and carbon-constrained operating environment, we are convinced it will be a By the end of our 2014 fiscal year (FY14), we had key source of competitive advantage for our company reached 46% recycled inputs, putting us firmly on track – and for our customers. to achieve our interim goal of 50% by 2015. We also reduced our absolute greenhouse gas emissions by 17% since our baseline – including 4% in FY14 alone. 4 Adding More, Creating Value Novelis Sustainability Report 2014 Overview Strategy Sourcing Manufacturing Customers Consumers About This Report While our increased use of recycled aluminum – In addition, we continued to work with all of our and corresponding decreased reliance on primary automotive customers to implement closed-loop aluminum – is central to our shift toward a closed-loop manufacturing processes in which we take back their and low-carbon business model, it’s just one element of production scrap, re-melt it, cast it and roll it again. And our broader sustainability strategy. We are also focused we advanced our efforts to take the closed-loop model on implementing sustainable manufacturing processes even further by developing new, more easily recycled in our own operations, and on what we see as the other alloys – and by leveraging higher-recycled-content foundations of being a sustainable company: operating materials – in automotive applications. ethically and responsibly, protecting the health and safety of our people, developing our employees and FY14 also marked the commercial debut of evercan™ contributing to the communities where we operate. – the world’s first independently certified, high-recycled- content aluminum beverage can sheet – when Red Hare Our shift toward a closed-loop and low-carbon Brewing Company announced it would package its craft approach is also requiring us to engage and partner beer exclusively in cans made of Novelis’ evercan sheet. with a broader and more diverse set of stakeholders, The product is a technical breakthrough and represents to challenge and inform our thinking and to advance a huge step forward in enabling aluminum to realize its shared objectives that cannot be achieved on our own. full sustainability potential. We remain focused on closing In FY14, for example, we launched a new partnership the gap to our ultimate goal of creating a 100% recycled with the World Wildlife Fund (WWF). Novelis was content aluminum beverage can. accepted into WWF’s Climate Savers Program, an exclusive initiative to encourage companies to reduce During the year, we also expanded recycling capacity their operational carbon footprint and act as agents of in all of our operating regions – including putting change within their spheres of influence. the finishing touches on our new recycling center in Nachterstedt, Germany, commissioned in June 2014. We also remain committed to the United Nations Global The new facility will be the world’s largest and most Compact, to which Novelis is a signatory. This report advanced aluminum recycling center – and it will serves as our third Global Compact Communication on firmly solidify Novelis’ position as the largest recycler Progress, and we are continuing to work to implement of aluminum in the world. its 10 principles. As we acknowledged when we set our ambitious sustainability targets in 2011, I have fundamental confidence in we were committing to do things we didn’t yet know how to do, using technologies Novelis’ ability to create and apply we had not yet invented. But then, as now, the disruptive innovations required to I have fundamental confidence in Novelis’ ability to create and apply the disruptive drive the radical change we envision. innovations required to drive the radical change we envision. Our FY14 Progress Since then, we have made great strides and filled As we detail in this report, in FY14 Novelis continued to in many of the unknowns – though certainly many execute on its aggressive growth plans, and we made challenges and uncertainties remain. In the process, solid progress toward our business and sustainability we’ve also rocked the boat, at times seeking to move objectives, even in the face of some significant faster or more aggressively on sustainability than some market challenges. The scale and pace of change of our stakeholders. But I am firmly convinced that the and expansion underway in our company remains transformation Novelis is leading is what society wants unprecedented – and yet our execution remains – and what the planet and the global economy need superb, which is a testament to the talented, committed – and that it will be the key driver of our company’s and hardworking Novelis employees around the world. long-term success. Building on our long-time partnerships with Jaguar Thank you for taking the time to learn about Novelis’ Land Rover and other major global carmakers, we vision to lead our industry through sustainability and further strengthened our position as the leading innovation. We invite your feedback and partnership supplier of aluminum sheet to the automotive industry as we work to make it a reality. when we were selected in FY14 as a key supplier for Ford Motor Company’s new aluminum-intensive 2015 F-150 pickup truck. Philip R. Martens, President and Chief Executive Officer 5 Adding More, Creating Value Novelis Sustainability Report 2014 Overview Strategy Sourcing Manufacturing Customers Consumers About This Report Performance Summary Our overall progress toward our targets continues to be strong. While there is some variability in our year-on-year performance, we believe we are firmly on track to achieve the targets.