investment viewpoints

Engaging with aluminium on net zero and biodiversity

Engaging with aluminium on net zero and biodiversity
Rebeca Coriat - Head of Stewardship

Rebeca Coriat

Head of Stewardship
Anouchka Miquel - Stewardship Analyst

Anouchka Miquel

Stewardship Analyst

Aluminium is an energy-intensive industry that is crucial for the energy transition to net zero. Different companies are adopting varying approaches to reducing their carbon emissions. This case study outlines our engagement actions with two producers, highlighting the need for enhanced biodiversity considerations as a key issue in the energy transition and recognising there is no single way for any industry to decarbonise.


Need to know

  • We engaged with a US aluminium producer and a Scandinavian industrial company on their different approaches to reducing emissions
  • Our engagement activities focused on several areas including recycling, R&D, protection of biodiversity and controversies
  • We believe the strength of engagement is to identify examples of best-in-class practices, help each company pursue its pathway and encourage progress for the benefit of investors


Aluminium: an essential material

Accounting for 1.1 bn tonnes of CO2 emissions per year, the aluminium industry generates around 2% of global emissions resulting from human activity. In parallel, demand for aluminium, an essential material for several key industries including construction, transport and power transmission, is expected to grow by more than 50% by 2050 versus 2020.

The inherent properties of aluminium – it is lightweight, durable and recyclable – make it the material of choice for energy-efficient buildings, fuel-efficient mobility and recyclable packaging. As such, aluminium players have a pivotal role to play by delivering low-carbon-footprint products.


Engagement background and aims

There is no single way for any industry to decarbonise. The tabs below contrast two aluminium producers with different approaches to proposing low-carbon aluminium products: a US aluminium producer and a Scandinavian industrial company. Both engagements are at an early stage and the companies are advancing their decarbonisation in distinctive ways: the strength of engagement is understanding precisely that, and helping each company pursue its pathway.

In addition to carbon emissions, aluminium’s value chain, especially the extraction part, poses important environmental challenges. Ensuring biodiversity preservation is thus an essential engagement angle in this industry. Both companies have developed their own, unique methodology to assess the biodiversity impacts of their activities and establish restoration metrics on their mining sites.

We believe engagement offers investors double value: 1) By moving the decarbonisation needle at depth, one company at a time. While we cannot ensure what decarbonisation success lies ahead, as engagers we are encouraging progress for the benefit of investors; 2) By identifying best-in-class business models and approaches, we seek to foster improvements in laggard companies, even if more progress may still be needed in particular areas.

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