Business planning and risk management

Hydro's overall goal is to create shareholder value through satisfied customers and motivated and competent employees. We have defined two main processes to ensure that short and long-term targets are achieved.

The portfolio, strategy and business planning process involves strategic and operative planning and results monitoring. The planning, which reflects our ambitions and values, is the basis for the strategies and measures that form the business plans at all levels of our organization. We define key performance indicators for each unit, including financial, human resource, ethical, compliance and HSE objectives, in addition to unit-specific operating targets.

The people process is designed to assess and develop our human resources, and is an integral part of our annual business planning. Its aim is to promote the potential of individual employees and of our organization as a whole.

Risk management is an integral part of all our business activities and decisions. The Board of Directors sets expectations, oversees Hydro’s system of risk management and reviews key risks through biannual updates which serve as an important foundation for the strategy and business planning processes. In addition, specific risk topics will be subject to more frequent updates.

The Board Audit Committee supports the Board of Directors’ supervisory role. Progress on risk mitigation is reflected in the remuneration schemes of the Chief Executive Officer (CEO) and Corporate Management Board. The Corporate Management Board assists the CEO in ensuring that Hydro has implemented an effective system of risk management and that appropriate actions are taken to mitigate any known undesirable risk exposures.

As a member of the CMB, the Chief Financial Officer (CFO) is responsible for the Enterprise Risk Management (ERM) function which, through the Head of ERM, develops Hydro’s central risk management framework.

Public affairs and lobbying

Given the nature of our industry, Hydro is particularly interested in policies dealing with climate change, reducing emissions from industrial processes, sustainable production and consumption, trade, energy efficiency, energy markets, health and safety at the workplace, etc. Hydro recognizes the value of engaging with public authorities and other stakeholders in relation to the development of various policy initiatives impacting our industry. Hydro interacts primarily with those decision-makers in countries where we have significant operations, such as Norway, Germany, France, Australia, Brazil, USA, as well as with regional structures like the European Union institutions. In general, we promote a pragmatic approach - once ambitious legislative objectives have been set by the political leaders, the market must be left to work towards achieving these objective at the lowest possible cost for society. For example, we support the development of market-based instruments, such as emissions trading, to reduce greenhouse gas emissions in the world.

Hydro promotes its views on issues of importance to us either through direct interaction with public authorities, or through the various industry associations we are member of. These include: the International Aluminium Institute, the European Aluminium Association, the World Business Council for Sustainable Development, the European Roundtable of Industrialists, the Federation of Norwegian Industry, the American Aluminium Association, and many more. Hydro subscribes to the Code of Conduct for Lobbying in the European Parliament, and is currently preparing its submission to the European Register of Interest Representatives, set up by the European Commission. Hydro also is a member of a series of think-tanks, especially in Brussels, and engages regularly in discussions with various NGOs.

Most resources are dedicated for lobbying activities within the EU, Norway and Brazil. Such activities within the EU is publicly reported through the EU Transparency Register. In Norway and Brazil about one full-time equivalent is dedicated to lobbying activities in each country.