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