Can Manufacturing Giant Alcoa Be Socially Responsible?

Alcoa (Aluminum Company of America) is a baffling company from a sustainable business perspective. As one of the top three largest aluminum companies on earth, its CSR process shows how difficult and slow implementing large scale CSR can be, and illustrates the challenges to making meaningful changes to a conglomerate that includes international mining and production facilities. Alcoa has won dozens and dozens of sustainability awards every year in an array of countries since 2004. But, does it really deserve them?

Alcoa Talks the Talk

Alcoa is skilled at communicating its CSR merits. Its CSR web display is six pages long, and each of those pages represents a matrix of dozens of sub-pages. Alcoa's concern appears genuine. They have been working with stakeholders since approximately 2002 and were ahead of the CSR curve. Alcoa makes an effort to be transparent, which is the byproduct of a 2007 Stakeholder Panel that is frequently referenced by its sustainability materials, and seems to have been a turning point for Alcoa.

CSR Credit for Obeying Laws?

Some of what Alcoa boasts about in its sustainability reporting is minimum compliance with laws. For instance, Alcoa gives itself human rights credit for paying minimum wages where legally required and prohibiting slavery. Either statements like these are unimpressive, or manufacturing throughout the world is unscrupulous and meeting basic minimums for human rights is a feat.

Water, CO2 Show Improvement

Some of Alcoa's most easily quantified areas of improvement are its water use and C02 output reduction. As of 2008, it reduced its water use by nearly eight hundred million metric tons and reduced its CO2 output by about 40 million cubic meters. That sounds significant. However, it may not be for such a global company considering their total consumption. And despite its reductions (which seem to have plateaued), it's hovered around the 15^th spot on University of Massachusetts' Political Economy Research Institute's "Toxic 100" list for years.

Areas of Hypocrisy

One of Alcoa's most criticized projects is an smelter built in Iceland. It required damming and flooding a valley and building a plant on an undeveloped fjord [plant on fjord pictured above]which Alcoa then blithely touted as 'renewable' hydropower[google image 'iceland' + 'alcoa' + 'dam' encouraged]. Despite a ruling by the Icelandic Supreme Court that the smelter was illegal, it was built anyway. At minimum, building the smelter violated Alcoa's declared core value of "Operating in a manner that protects and promotes the health and well-being of the environment." (Environment page of its CSR site). It's difficult to point to a positive moral from a company that sets forth transparent environmental goals and then betrays them.

Alcoa's justification for its behavior is that the opposition to the Iceland smelter was exaggerated. After all, the parliament did approve the plant. However, this does not resolve the violation of its own environmental principles and the way that violation undermines its CSR credibility.

Sucked into the Downturn

Alcoa went from an over $2.5 billion net income in 2007 to a $74 million loss in 2008. It will be fascinating to see whether Alcoa can right its business without killing off its social responsibility efforts. However, Alcoa's 2008 Sustainability report claims that they are as devoted to their CSR as ever and that CSR will not suffer despite cash restraints.

Alcoa: Trying?

Alcoa is trying. While there seem to be CSR drawbacks for every point of merit, and while its slough of awards and high rankings [Alcoa once rated the top green company by BusinessWeek top business ethics in Feb by Covalence]suggest low standards for business overall, Alcoa is making an effort to be the least-bad commodity conglomerate it can be. As Alcoa points out, aluminum itself is key to the green movement's preference for lightweight, strong materials. Alcoa is an example of a company that has more transparency about CSR than CSR itself, however it also appears that they want to change their business to respond to stakeholder concerns. The reality is that, even at its cleanest Alcoa still may be a top polluter. That even at its most innovative, Alcoa may take decades to change. We should give Alcoa credit for trying, and relative to their industry, some success.

Photocredit: The Banz