Abstract
Organizations develop, adopt and implement climate change strategies for various reasons. One, the organization’s workforce intend to indicate to their stakeholders that they are good corporate citizens by practicing corporate social responsibility. Two, organization have realized that implementing GHG reduction strategies is beneficial to their profitability. Additionally, organizations are partnering only with those who endorse the proactive approach to reducing the GHG emissions. Lastly, organizations want to keep in line with regulations and policies related to reducing GHG emissions. Thus organizations set new goals and objectives in their quest to reduce the GHG emissions, and the process involves altering mission statements to include commitments to reduce GHG emissions. Amending mission statement means the entire workforce of the organization must be aware and alert to keep up with the changes. The stakeholders, on the other hand, get to be convinced that an approach toward climate change is ongoing. This paper is a case study that focuses on Alcoa as a corporation, and it aims to discuss the organization's journey toward developing and implementing a climate strategy. More specifically the paper examines the company profile; climate change program implementation summary; goals and targets; Baseline Emissions data profile; GHG funding summary; external outreach; policy perspectives; and challenges facing the organization in the future.
Introduction
Alcoa is a US-based Industrial Corporation that produces aluminum. The organization is the world’s sixth largest producer of aluminum and focuses on the production of fabricated aluminum, alumina combined and primary aluminum. The corporation has its headquarters in Pittsburgh, Pennsylvania, and has operations in ten other countries. The organization started operating in 1888 and since it has been involved in the production of aluminum bauxite and alumina. Bauxite is the primary raw material input for refined alumina processes. The company’s global bauxite mining operations consist of many methods most of which contain various aluminum hydroxide minerals. The two most important minerals in the bauxite business are boehmite and gibbsite. The aluminum business combines the casting and smelting processes to obtain primary aluminum. The smelting operations yield primarily molten aluminum which is further cast into value-add ingot products like slab, rod, and billet, or foundry ingot.
Delegate your assignment to our experts and they will do the rest.
Company profile
The corporate headquarters are found along 201 Isabella Street, Pittsburgh, Pennsylvania. The corporation has 7.20% private stakeholding, 43.59% other institutional stakeholding and 43.32% mutual fund holders. The company had 60,000 employees by 2013 and 14,000 by 2017. The top executives are Roy C. Harvey President, Chief Executive Officer & Director, Tómas Már Sigurdsson Chief Operating Officer & Executive Vice President, William F. Oplinger Chief Financial Officer & Executive Vice President, Ben Kahrs SVP-Strategy, Technology & Corporate Development, Catherine Garfinkel Chief Ethics & Compliance Officer. The corporation falls under the aluminum industry and the non-energy minerals sector.
Climate change program implementation summary
Sustainability is a core driver since Alcoa views sustainability as social responsibility, environmental excellence, and financial success. Given the society is increasingly adopting a carbon-constrained approach to production and Alcoa has a high level of energy consumption, climate change strategy, therefore, is a fundamental part of Alcoa’s sustainability efforts. Alcoa believes that it is not smart to wait for policy requirements or irreversible damage from climate change to undertake operational and strategic changes and so reducing environmental impacts beforehand is smart business.
Alcoa’s need to grow and supply the market demands alongside the organizations high energy demands leaves the corporation vulnerable. The corporation management, therefore, strives to be a part of the solution rather than the problem. Alcoa operates in different countries and to work successfully in future; there is a need for their products to be sustainable in the broadest sense. Additionally, Alcoa focuses on operating in the coming centuries, let alone next quarter. Therefore, the Alcoas are conscious of the need for their products to be sustainable.
The top management plays a paramount role concerning climate-related strategies by providing the initial backup. At Alcoa, if the senior level leadership supports a policy, then it will be adopted and endorsed otherwise it won’t be considered. Alcoa has demonstrated a steady emphasis on energy efficiency by reducing the amount of energy used to refine bauxite into alumina, concentrate alumina to aluminum and fabricate useful products out of Aluminum.
The corporation makes it its primary focus to reduce GHG emissions through reduced usage of perfluorocarbons emitted through Anode effect and consequently increase the use of recycled materials. The corporation is working on a technology that would see the elimination of consumable Anode which is associated with PFT and CO2 emissions, and replace the same with inert Anode in all the Aluminum production processes.
Alcoa’s recycling initiatives have been increased a notch higher given that they have understood that recycling could be not only the right environmental choice but also the best economic choice. Only five percent of the energy required to produce primary Aluminum is used to create the same from recycled materials. Energy costs will not fill in the long run, and therefore it is therefore strategically wise for Alcoa to embark on recycling methods.
Goals and Targets
Alcoa’s two primary objectives involve reducing their footprint and growing their handprint so to accomplish this; the corporation has set many targets which are discussed below.
• To reduce the amount of direct and indirect CO2 equivalent intensity in the primary products produced for global use by 30% as of 20120 and by 35% as of 20130 from a 2005 baseline.
• From a 2005 baseline, a 50% reduction of the absolute greenhouse gas emissions.
• Reduce the amount of greenhouse gas emissions for products by thrice the amount of emissions caused by the manufacture of the same products.
• Demonstrate a steady reduction in the energy intensity from a 2005 baseline of global primary products by 10% in 2020 and 15% by 2030.
• Reduction in combined energy intensity of engineered products from a 2010 baseline in transport and construction as well as products and services.
• To reduce the quantity of fresh water intensity usage from a 2005 baseline, by 25% as of 2020 and 30% as of 2030.
Baseline Emissions data
A lot of energy is consumed when producing primary aluminum and particularly in the smelting stage, causing the release of Greenhouse gas emissions. Alcoa acknowledges that the effects of GHG emissions and therefore strives to implement low emission and energy efficient methods in their processes. Energy efficiency is a significant indicator of performance hence Alcoa makes an initiative to publicly report emissions and energy efficiencies according to the National greenhouse and energy reporting system standards as shown in the following tables.
Adapted from Alcoa’s Sustainability Highlights report:http://www.alcoa.com/australia/en/pdf/2014-2015-Sustainability-Highlights-Report.pdf.
GHG funding Summary
The greenhouse gas reduction funding was established by SB 535 (de León), AB 1532 (J. Pérez) and SB 1018 (Budget and Fiscal Review Committee) in 2012. The funding is aimed at executing programs which help reduce greenhouse gas emission. Moreover, the funding is used to start programs targeting to help low-income communities and communities with color, the SB 535 Coalition and the Sustainable Communities for All coalition.
The Sustainable Communities for All coalition supports the funding of innovative waste reduction, enhanced urban greening, high-quality transit, walking and biking opportunities, energy efficient homes that are located near transit areas that are affordable to low-income communities. The Sustainable Communities for All coalition believes that the projects funded by greenhouse gas reduction funding should achieve measurable GHG reductions given a lot of cash is spent of the projects.
On the other hand, the SB 535 coalition has been strategically encouraging the projects funded under the greenhouse gas reduction fund to comply with the requirements of SB 535. The coalition maintains that 25% of the Greenhouse gas reduction fund is channeled to aid the disadvantaged communities and out of the 25%, 10% be used to fund projects located within the localities of the underprivileged people.
External outreach
Alcoa in her external reach attempt has worked with several groups to further her goals of GHG reduction through recycling. Alcoa is a member of curbside value partnership (CVP). CVP is an organization that specializes in the trading of aluminum cans, and aluminum can sheet, and the organization is an appendage of Aluminum cans council. CVP collaborates with their material recovery facilities, and the small and large communities to promote and increase education concerning recycling of a range of useful materials through existing curbside collection channels. The direct participants benefit from the exercise by acquiring knowledge, data collection techniques and an understanding and interpretation of recycling techniques mainly Aluminum Cans.
Alcoa’s tendency to commit to the climate-related strategies is an indication of the insights it has gained from external outreach. The corporation has partnered with various environmental friendly Ngo’s to accomplish her goals of climate change. Alcoa admits that such partnerships are necessary since they ascertain third-party verification and credibility. However, the company maintains that the connections are not merely for stamp approvals, but instead, the partnerships are vital to then since they provide platforms for education and learning. Alcoa admits that they are not the experts of everything and they need to learn. Therefore their people have broadened their view of sustainability by interacting with others already on the platform.
Alcoa’s relationship with the key investors is above par. The corporation seeks the input of the principal investors on a regular basis thereby promoting its communications and investor relations strategy. Alcoa maintains an honest discussion concerning sustainability initiatives and corporate governance with the principal investors and proceeds to invite investors to the facilities. Each year since 2013, the company has ensured that it convenes a meeting with top five to fifteen of the key investors whenever they pay a visit to a key facility. Moreover, the corporation’s books are open to scrutiny and analyst as well as other interested stakeholders studies Alcoa’s documents especially the sustainability reports, after that giving reports how the company reduces risks.
External Outreach-public communication summary/Approach
Alcoa is a public company and therefore bound to follow the rules and regulations governing public disclosure of information. Alcoa, therefore, makes it her top objective to protect the private information of investors, suppliers, workers, and distributors of their products. Alcoa’s external communication structure is designed to allow only designated people to speak on behalf of the company. Board members are not to speak on behalf of the company whereas the management can speak. This way communication mishap will not be a problem, and thus customers, as well as other interested parties, find it easy to trust information published by the company.
The company endeavors to streamline communication processes to ensure that selective disclosure of information is done to avoid incidences that would result in an unfair advantage. Shareholders, media, securities analysts, government investigators and many other parties’ stream on a regular fashion seeking information of one kind or another. The information providers are keen not to overstep their lines when informing visitors, and the management has directed that media requests and questions from investors are to be referred to an investor relations representative or corporate communications personnel.
The company has further directed the workers to avoid making utterances on behalf of the company or pronouncements that would appear to be on behalf of the company. Additionally, workers must obtain approval from their respective managers and corporate communication personnel before consenting to participate in trade conferences or issuing information to be published.
Policy perspectives
Alcoa consents to the cap and trading system where if all gases are included, then regulatory measures are imposed. The company mandates the local management to determine the position of the corporation in each country. Company positions in each state vary depending on the local circumstances. Alcoa is particularly interested in a piece of legislation about climate change decision that challenges early action. Alcoa seeks to use the 1990 baseline whereas the bill provides for 2013 and would not consider companies taking early action. The corporation feels that the legislation if enacted would encourage an increase in the short run and disallow companies from taking early action.
Alcoa believes firmly that there must be a uniform playing field and global standards for all companies and consequently, in 2003 the company testified in favor of McCain-Lieberman climate stewardship act. The company had established through internal success that to achieve a target; there must be a systematic procedure for measuring and reporting. Therefore, in 2015 Alcoa has called for a mandatory emissions reporting and compilation of a comprehensive National registry. Alcoa believes that setting a uniform platform not only encourages the starters in the industry but creates adequate room for competition, learning, and innovation. Furthermore, they maintain that what happens to one should happen to all.
Alcoa does not push to gain credit from users of its products due to reduced emissions but instead aims to take advantage of the expanding market if GHG reduction efforts can yield positive results. Alcoa mostly trades semi-fabricated products unlike other companies, and therefore the company would be contented with increased restriction of GHG emissions as this would mean potential success to them. Additionally, the company believes that the high performance to mass ratio of aluminum products will thrive in the future markets especially in environments where energy and GHG emissions are restrained.
Challenges facing the organization in the future
Alcoa has made a breakthrough in GHG reduction efforts by creating an all-around awareness through web-based systems that allow for measuring and tracking of GHG emissions. Alcoa, therefore, believes that a part of their journey toward emissions reduction is accomplished since their carbon footprint is made public to all. The company further takes pleasure from the knowledge that it has leveraged her efforts concerning sustainability and climate change resulting in strategic and reputational benefits. A case in point is an invitation by the Iceland government to build a smelting facility. The success of the company in Iceland has broadened her stake in sustainability and climate change efforts.
Focusing ahead, Alcoa views the market as bright and therefore seeks to elevate the progression into the light-weighting of vehicles. Alcoa has identified that the demand for Aluminum is growing at a constant annual rate of 4.3% over the last decade, and the use of aluminum especially in ground vehicles is also increasing. Additionally, Aluminum has become the second most useful material in car making superseding iron and coming only second to steel. In 2005 Alcoa Announced a deal with Hyundai motors that involved the use of Alcoan cast aluminum to make the rear upper control arm of the Santa Fe Crossover vehicle.
Despite the success, Alcoa still thinks that improvements to GHG related initiatives are necessary. The management admits that it would be easier if the programs being launched right now were begun ten years earlier, considering the number of resources that have to be employed to execute a plan. For instance, it requires a significant amount o time and other resources to train 130,000 people. A real challenge to Alcoa is as a consequence of Political and regulatory policies that are formulated through uncertain global climate change policy leads to a non-uniform ground that deters global operations.
Conclusion
Organizations develop, adopt and implement climate change strategies for various reasons this case study has focused on Alcoa as an organization, and it has discussed the organizations journey toward developing and implementing a climate strategy. In detail, the paper has reviewed the company profile; climate change program implementation summary; goals and targets; Baseline Emissions data profile; GHG funding summary; external outreach; external outreach-program implementation/summary, policy perspectives; and challenges facing the organization in the future.
Alcoa is a US-based Industrial Corporation that produces aluminum. The corporate headquarters are found along 201 Isabella Street, Pittsburgh, Pennsylvania. Given the society is increasingly adopting a carbon-constrained approach to production and Alcoa has a high level of energy consumption, climate change strategy, therefore, is a fundamental part of Alcoa’s sustainability efforts. Alcoa’s two broad goals are reducing their footprint and growing their handprint.
The GHG reduction funding is aimed at executing programs which help reduce greenhouse gas emission. Moreover, Alcoa in her external reach attempt has worked with several groups to further her goals of GHG reduction through recycling
Concerning policy perspective, Alcoa consents to the cap and trading system, a uniform playing field and global standards for all companies additionally, company believe that the high performance to mass ratio of aluminum products will thrive in the future markets.
Alcoa knows there are challenges in future, therefore; the corporation believes that a part of their journey toward emissions reduction is accomplished since their carbon footprint is made public to all. Alcoa views the market as bright and therefore seeks to elevate the progression into the light-weighting of vehicles. Lastly, Alcoa still thinks that improvements to GHG related initiatives are necessary.
