Involving Stakeholders in Measuring Sustainability Performance

March 18, 2008

Anita Roper
Director Sustainability
Alcoa Inc.

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In the remote fjords of east Iceland, a partnership between Alcoa, its electrical supplier Landsvirkjun, and various stakeholder groups helped ensure a new aluminum smelter and related hydroelectric facility would balance the environmental, social, and economic effects on a non-industrial area populated by around 10,000 residents.

When Alcoa’s Fjarðaál smelter and the Landsvirkjun hydropower facility were announced, controversy broke out almost immediately, with the focus primarily on the effects such industrialization would have on the surrounding environment. In addition, expectations and concerns already existed within the affected communities from previous smelter and hdydropower projects that never materialized.

Alcoa formed a partnership with Landsvirkjun to jointly create a pioneering sustainability initiative that involved stakeholder input and would create a way to measure the long-term environmental, social, and economic performance of both projects.

The result was the formation of a 40-member stakeholder advisory group in mid-2004 that consisted of both project proponents as well as opponents who represented myriad stakeholder groups.

The advisory group decided its purpose was to develop indicators to measure the performance of the hydro facility and smelter against sustainability objectives adopted for the project by Alcoa and Landsvirkjun. It identified almost 50 indicators and more than 70 associated metrics, with Alcoa and Landsvirkjun determining the targets for each due to the technical knowledge required.

Each indicator was categorized as one of the following:

Direct-Alcoa (or Landsvirkjun) has sole accountability for the respective performance (e.g., plant air emissions).
Indirect-Alcoa or Landsvirkjun has some level of influence; however, other stakeholders also influence performance (e.g., the number and proportion of jobs in key economic sectors nationally and in the local community).
Induced-The project will affect changes in the community; however, Alcoa or Landsvirkjun has limited ability to affect the outcome (e.g., the number of cultural events per year in east Iceland).

The facilities began operation in 2007, and progress against the metrics is reported via a website (www.sustainability.is) that is managed by Landsvirkjun and Alcoa.

The sustainability initiative strengthened the working relationship between Alcoa and Landsvirkjun. It also laid the foundation for Alcoa’s integration into the community as well as the formulation of the company’s policies and goals for Iceland at the national and local levels.

Anita Roper is Director of Sustainability for Alcoa Inc.

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