INTERVIEW: "The world’s smallest carbon footprint aluminium, made in Clervaux" with Mr Ludovic Dardinier, Managing Director, Primary Metal, Hydro Aluminium Clervaux S.A
One hour max talk on sustainability strategy - Session 2
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“The world’s smallest carbon footprint aluminium, made in Clervaux” with Mr Ludovic Dardinier, Managing Director, Primary Metal, Hydro Aluminium Clervaux S.A.
Low carbon, high margin aluminium
Aluminium production is one of the most energy intensive manufacturing processes. Yet Hydro Alumium Clervaux SA has the world’s smallest carbon footprint in the sector, which helps its products be in high demand. Ludovic Dardinier, the Luxembourg plant’s managing director, explained.
Embedding sustainability strategy in a business such as Hydro comes from the top. “Our strategy is built on our three key values set by the board: care, courage and collaboration, and this informs our discussions at every level,” Ludovic said. There is hard business logic behind this stance. For example, the firm’s recently developed Circal 75R product – three-quarters of which is from end-of-life scrap – is currently a high-margin market leader, made in Luxembourg.
Clients willing to pay
The product is sold out, just three years after substantial investment brought it to market. The firm is now considering expanding the capacity of the Clervaux plant to keep pace with demand. “Customers are really willing to pay extra when they can see clear benefits and not greenwashing,” Ludovic said.
Hydro’s aluminium production process in this country emits the least carbon dioxide of any operation in the world. The traditional refining and smelting process produces on average 18kg of CO2 per kilo of metal, but in Clervaux this is just 2kg. The Luxembourg plant is focused on recycling, a process which is much more energy efficient than extracting the metal from bauxite ore.
Driven by strategy
Indeed Luxembourg was the Hydro group’s first recycling plant, established 20 years ago, working with scrap from the country and the neighbouring regions. Recent investment in the Grand Duchy means the operation can improve product quality despite using more difficult to process scrap. Ludovic noted with satisfaction that this is a healthy business model: turning abundant low-cost scrap into a premium product.
This happy situation didn’t happen by chance. Yes the firm is benefiting from an upswing in demand for low carbon products, but its innovations have enabled this demand. Company boards have set the tone. They meet several times a year, with a conference call at least every month, and discussions of sustainability key performance indicators is a priority, along with financial and technical concerns. “We always start with safety – aluminium production can be dangerous – before moving onto the environment and human resources questions,” Ludovic explained.
Dedicated climate director
At group level, the firm has a dedicated climate director, who has responsibility to track sustainability KPIs in each plant around the world. For example, the firm is part of the European emissions trading scheme, and these measurements are made in all countries, even where these are not required by law. This information is valued by customers and it also affects the calculation of employee bonuses.
It helps that group culture has been embedded in sustainability for over a century. Hydro began operations in the early 20th century harnessing Norway’s water resources to generate electricity. The firm then diversified into areas such as aluminium production, using the abundant, cheap energy it produced. The Oslo-based firm grew strongly on these foundations, and now employs around 36,000 people working in some 200 facilities in 40 countries generating €15bn sales.
The firm’s board arrived at these strategies through rigorous analysis of opportunities. This featured on-going discussions with all stakeholders: suppliers, customers, the public sector and civil society groups. For instance, in Luxembourg that includes working with the Ministry of the Economy which has a mission to support green innovation. Hydro also has a commitment to meeting global quality standards and setting their own, high-level benchmarks. These policies put the firm high up on global lists of sustainable companies.
Ambitious targets have been set by the board, with targets for reducing carbon footprints in 2020, 2030 and 2050. These are the backdrop to new innovation and investment across the group. They also do not neglect other goals related to “care”, including diversity KPIs. “These can be difficult to fulfil as there can be a tendency for fewer women to apply for jobs with industrial companies, so we need to take a pro-active position,” Ludovic explained.
On-going effort is required to maintain this pace, and drive has to come from the top. “The competition is moving in this direction, so if firms don’t take the right path they will disappear,” Ludovic added.