Hydro

Focus on a Member - September 2009

In this month's interview, Anne-Lene Midseim, Head of Corporate Social Responsibility at the aluminum company Hydro, discusses the company's global commitment and its environmental impact strategies.

The Norwegian government has just launched a new White Paper on CSR with a strong focus on the international operations of Norwegian companies. What is your opinion on this white paper and how do you ensure responsible business practices across your global operations and supply chains?

Anne-Lene Midseim

We find the White Paper important and useful to support the social responsibility aspects of business, also in Hydro.

The White Paper and the subsequent debate in our parliament, Stortinget, has to some extent sorted out the discussions around the role of companies, especially in countries with weak governance.

Through the White Paper the Government defines CSR as extending beyond a company's statutory obligation to comply with national legislation in the host country as well as with Norwegian legislation insofar as it applies to activities or operations carried out abroad. The important areas for company's social responsibilities are listed as:

Respecting human rights
Upholding core labor standards and ensuring decent working conditions
Taking environmental concerns into account
Combating corruption
Maximizing transparency

The government stresses in the paper that a company's responsibilities also extends to its value chain, or it's sphere of influence. We also welcome the government's efforts to increase awareness and knowledge about international standards like the Global Compact.

For a company like Norsk Hydro, that for years has had a structured approach to our responsibilities, the expectations expressed by our government do not represent any significant new demands. We will continue to step up our activities to implement our CSR policies, with focus on compliance and human rights and monitor closely how this is embedded in our investment and procurement processes and projects.

In Hydro CSR is a line responsibility. The Corporate Social Responsibility Staff recommend policies, offer advice and also support line management. CSR aspects are included in the decision basis. Our efforts are supported by a formalized CSR Network where all business areas and key staffs are represented.

As a global player operating in many different markets, how does your company deal with the issue of corruption?

We try to combat it. Our efforts are based in our Code of Conduct and Hydro Integrity Program that lay down clear principles and standards that applies to all parts of Hydro and to intermediaries representing us. Again, compliance is a line responsibility and we practice the same standards in all countries and units

We are now in process of reviewing and revising our Integrity Program. The launch of the new program will be followed by internal communication to ensure that all units and all relevant personnel are familiarized with the updated program.

In addition to face-to-face training provided to a substantial number of managers, we also have another company wide, mandatory, program called "You and Hydro" which includes a training session on anti corruption. Finally, the CSR staff, together with our Legal staff offer advice on specific matters.

Externally, Hydro participates in the Steering Group for Transparency International's Business Principles for Countering Bribery, and supports EITI, PACI and other organizations to learn more and also to join in their efforts to combat corruption. We are also a member of TRACE and draw on their services i.e. to check intermediaries.

How is the economic downturn affecting your company and industry and what positive measures are you taking?

The metal industry has been hit hard by the present economic downturn. Hydro is an aluminum company with activities all along the value chain from mining and power production, to production of value added, tailor made components to finished products.

To navigate the storm, we have made forceful actions to curtail production even if it has led to closure or mothballing of plants. We have had to reduce our manning significantly, which we have implemented in close cooperation with the relevant unions and works councils.

In order to remain capable of shaping our own future, we have reduced capital expenditure, which in turn has led to investment projects being shelved or cancelled. This have, of course, reduced our need for recruitment in the short term.

The only activity we have not scaled back is our research and development to prepare future production technologies meeting the needs for improved environmental performance and reduced specific energy consumption.

Nevertheless, Hydro remains fully committed to our CSR principles and to combating corruption. Keeping in mind that CSR is not something Hydro does, but the way Hydro does its business, we believe that in this respect we will continue to hold a steady course through the downturn.

With the Copenhagen Climate Change Conference getting closer by the day, how are you engaging in the climate change debate and what are your core areas of focus in reducing your own environmental impact?

We have been addressing the climate issue for years. We take part in the debate on the future solutions both globally and in Europe,

Hydro is working closely with our industry partners both internationally and in Norway. We focus on the World Business Council for Sustainable Development, which we see as the leading industry voice in the debate on climate change. We are also deeply involved in the International Aluminum Institute, the global aluminum industry body.

Our CEO, Svein Richard Brandtzæg is one of the 50 members of the European Round Table of Industrialists, and Hydro is also represented on the board of the International Emissions Trading Association. We are also involved in the national industry associations in Norway and Germany, and in direct dialogue with the Norwegian delegation to Copenhagen.

At the same time as we internally work hard to improve our performance and develop new technologies to move forward on energy-recovery, energy-efficiency and the development of capture ready aluminum smelters.

A large portion of the energy in the electrolysis process is lost as heat through the cell walls. Finding ways to reduce heat loss and to recover energy is a key priority to Hydro.
Our best pot lines today produce 40 % more aluminum per kWh compared to the technology of the 1960s. This is a significant reduction but our research environments are continuously working to develop more energy efficient smelter technologies.
The greatest challenge in capturing CO2 from the electrolysis process is that today's level of CO2 concentration in the aluminum cell is very low (1-2%) compared to gas fired power plants (4%) and especially coal fired power plants (12%). Until we reach the same level of CO2 concentration as for gas fired power, capturing CO2 from an aluminium plant is not feasible. But our researchers in Årdal, Norway, are steadily moving closer to making our next generation aluminum smelter capture-ready.

Many of today's pressing socio-economic and environmental (demographic change, climate change) challenges require multi-stakeholder responses for any impact to be made. How are you partnering with specific or groups of stakeholders in addressing some of these?

Hydro is a global supplier of aluminum and aluminum products. Based in Norway, the company employs more than 20,000 people in 40 countries and has activities on all continents.

As a company we are rooted in a century of experience in renewable energy production, technology development and progressive partnerships. We are committed to strengthening the viability of the customers and communities we serve. Based on this, we are involved in a number of stakeholder partnerships on many levels:

Internally - we have close dialogue with unions and employee representatives, at the same time as we continue our culture of flat organization with open decision processes.
Locally - we ensure a close dialogue with our host communities so that they are fully informed on the impacts of the changes in the business climate for their unit and their community
Nationally - in the countries where we are a major player, we keep up the dialogue on national level. This applies first of all to countries like Norway, Germany and Slovakia - but also places like Jamaica, Qatar and others where we are participating through joint ventures.
EU - we aim at a direct dialogue on highest level to European Commission and the other European institutions.
Industry level - we take part in shaping the industry positions both on national levels where we operate as well as in the European Aluminium Association, Eurometaux and in the global International Aluminium Institute.
Global issue level - we have a long tradition of participating in more issue driven initiatives and organizations like the World Business Council of Sustainable Development, Amnesty International, Transparency International and more targeted partnerships like CO2 Capture Project together with leading energy companies and the The World Bank Prototype Carbon Fund.

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