Sustainability at Alcan is evolving as we refine our goals and establish metrics to effectively measure the impacts of our actions. Developing standardized and meaningful performance metrics remains a challenge, but we are making steady progress in concert with both industry partners and non-governmental organizations (NGOs). Part of the evolution is the growing recognition by employees of the tangible and broader value-creation that results from implementing a sustainable approach in all our businesses. Our efforts in this regard are laying the groundwork for further progress by embedding sustainability criteria directly into our decision-making processes. This has allowed sustainability to be increasingly seen as an integral part of value creation, whether in operational efficiency, customer satisfaction, employee well-being, ongoing community support or investor confidence.

While our diverse operating environments around the world present many challenges, our success is built upon the consistency of our business practices regardless of location or local regulations. Alcan’s corporate values, Worldwide Code of Employee and Business Conduct and the Alcan Integrated Management System (AIMS) all combine to support this consistency. AIMS consists of Value-Based Management, EHS FIRST, Continuous Improvement and a new fourth “People Advantage” pillar we launched at the beginning of 2006, recognizing that Alcan’s ability to maximize value depends, in large part, on the quality, skills and dedication of its employees. From our Executive Committee to employee work teams, this management framework is supporting the establishment of sustainability in the decision-making process at Alcan.

Addressing Key Sustainability Focus Areas
Within the “Alcan 8” focus areas identified in this report, we outline important opportunities and significant challenges across the Company: energy and greenhouse gas emissions, natural resource stewardship, managing economic change and employee well-being, among others.

Energy is a good example of the need to manage opportunities alongside challenges. An effective response to volatile energy markets is of vital importance to the Company’s long-term sustainability. While having an impact on our operations, global energy issues are also creating market opportunities. These include an increased demand for Alcan's expertise in proprietary, efficient smelter technology, as well as for lightweight aluminum and composite solutions and product innovations that help our customers and society respond to the need for greater energy efficiency and reduced greenhouse gas emissions.

Broad stakeholder engagement continues to be directly linked to Alcan’s business strength and long-term success. We believe our ongoing community support is most effective when tied to working with our communities to promote regional industrial diversification, particularly where shifts in technology and the global industry impact employment levels. Stakeholder engagement is equally important in planning greenfield and brownfield projects, and managing existing operations.

This is true for our Bauxite and Alumina projects in Australia, Guinea, Ghana, and India, where ensuring broad local support before proceeding is paramount. It is also true for our joint venture in China, where engaging stakeholders through our EHS FIRST management system resulted in a major improvement in environmental, health and safety behaviours within the plant and surrounding community. Similarly, engaging employees at our packaging plant in Dublin, Ireland, resulted in significant waste reduction and a positive bottom line impact of over $760,000, in addition to mobilizing community youth in the “race against waste”.

Our sustainability commitment and engagement efforts have strengthened our relationships with governments, a range of NGOs, local communities and indigenous peoples, as well as academic and research institutions.

Alcan was pleased to present its second annual Alcan Prize for Sustainability in 2005 to Aga Khan Planning and Building Services Pakistan for its efforts to improve Pakistan’s urban infrastructure and its innovative work to improve living conditions and the environment. This $1-million prize recognizes the outstanding work that NGOs are contributing to the cause of sustainability and encourages stronger linkages among business, government and NGOs. The 2004 recipient was the Forest Stewardship Council based in Bonn, Germany.

Embedding Sustainability in Alcan’s Business Groups
The past five years have seen intense change at Alcan. We have acquired or launched new businesses, divested or closed down others, developed our financial business systems, and implemented company-wide Value-Based Management, EHS FIRST and Continuous Improvement tools.

Alcan’s world-class EHS FIRST management system has been embraced by employees and produced dramatic improvements in 2005, including zero employee fatalities. Three contractor fatalities, however, tragically reinforced the need for ongoing diligence, in addition to the corrective actions that were taken. We also reduced our recordable case rate for injuries by 16% in 2005, with more than 67% of Alcan sites exceeding the corporate-wide goal. With respect to our environmental performance, we reduced Alcan’s total (direct and indirect) greenhouse gas emissions intensity by 25% between 1990 and 2005. As well, we have committed to further reduce our direct emissions intensity by 10% over the next five years (2006-2010).

We will continue to address a number of challenges independently and with our partners, including managing spent potlining, enhancing biodiversity, and reducing or eliminating environmental releases of concern, such as volatile organic compounds and greenhouse gases. Although such challenges are ongoing for Alcan and the aluminum industry as a whole, we have made great strides in specific areas, as illustrated in this report.

As we move forward, we will continue to embed sustainability by leveraging and capitalizing on the "Alcan People Advantage" – the new fourth pillar in AIMS – enhancing our business systems, accelerating employee engagement efforts and enhancing our ability to track progress and measure Company and stakeholder value related to our efforts.

Richard B. Evans
President and CEO

© 2006 Alcan Inc.