Preparation and Assumptions for ESRS Reporting BP-1

Norðurál ehf., a subsidiary of Century Aluminum Company, operates an aluminum smelter at Grundartangi that produces low-carbon aluminum. Production is powered entirely by renewable hydro and geothermal energy, and the company’s products are sold on international markets, including to the automotive, construction, and energy sectors.

Norðurál’s business model is based on efficient, low-carbon aluminum production, with sustainability increasingly integrated into the company’s overall strategy. This development reflects both growing stakeholder expectations and changes in the competitive landscape of the aluminum market, where the carbon footprint, traceability, and corporate responsibility are gaining increasing importance.
 

Governance System and Key Sustainability Priorities

Norðurál’s governance system and main sustainability focus areas include:

• Climate action – reducing greenhouse gas emissions (Scope 1, 2, and 3),
• Responsibility for employees, safety, and occupational health,
• Environmental management and sustainable production methods,
• Responsible management of the value chain and supplier network,
• Transparency and continuous improvement in corporate governance.

Norðurál operates under an integrated management system covering all aspects of operations, including quality, environmental protection, occupational health and safety, corporate responsibility, and governance information.

The core of the management system is Norðurál’s Quality Manual, which defines processes, procedures, responsibilities, and review structures. In addition, an electronic reporting system is used where employees and contractors register incidents, risks, and improvement suggestions. Reports are followed up with analysis, preventive measures, and systematic improvements.

The management system applies to all company operations and includes all employees, contractors, and partners. The system promotes continuous improvement based on the PDCA cycle (Plan–Do–Check–Act), in line with the ISO standards followed by Norðurál (ISO 9001, ISO 14001, and ISO 45001).
 

Certifications and Standards

Norðurál operates in accordance with internationally recognized standards for quality, environmental responsibility, and safety:

• ASI Certification (Aluminium Stewardship Initiative): In 2020, Norðurál received ASI certification for responsible and sustainable production, and was recertified under the updated ASI Performance Standard in 2023. The certification confirms compliance with strict requirements for corporate responsibility, environmental performance, and best practices in aluminum production. The next audit is scheduled for 2026. The ASI brings together stakeholders from across the value chain, including producers, environmental organizations, and consumer brands.li>
• ISO Certifications: Norðurál has certified its Quality Management System (ISO 9001), Environmental Management System (ISO 14001), and Occupational Health and Safety Management System (ISO 45001). These systems are integrated under the PDCA approach ((Plan–Do–Check–Act) and maintained through regular internal and external audits. Initial certification took place in 2012–2013, with audits conducted twice a year since then.
• Equal Pay Certification: Norðurál is certified under the Icelandic standard ÍST 85:2012 and holds PwC’s Gold Standard in equal pay certification.
• LME Registration: By meeting requirements for responsible sourcing (including OECD guidelines) and through certification under the above standards, Norðurál fulfills the London Metal Exchange (LME) criteria for registered brands.

 

Implementation of ESRS and Sustainability Reporting

Norðurál is publishing its first Annual and Sustainability Report in accordance with the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS). This report covers the fiscal year 2024 and builds on the existing data and systems within Norðurál and the Century Aluminum group. Since 2021, Norðurál has reported in line with the Global Reporting Initiative (GRI) standards in its previous sustainability reports.

The preparation process included:

• Identifying key sustainability topics through a Double Materiality Assessment,
• Aligning data collection and implementation processes across the company’s key functions,
• Support from the consulting firm Langbrók in ESRS interpretation, data management, and processes,
• Governance of sustainability matters.

The implementation of ESRS standards and follow-up on sustainability goals are overseen by a Sustainability Steering Group, which includes:

• CEO and Managing Director of Norðurál,
• Corporate Director of Communications and PR,
• Manager of Safety, Environment, and Improvements,
• Head of Sustainability at Century Aluminum.

The group meets regularly to review progress and coordinate sustainability efforts across business areas and with the parent company.

Norðurál’s Health, Safety, and Environment Committee oversees the implementation of objectives in these areas. The committee includes representatives of management, safety representatives, and safety officers, supported by an advisory group of experts and production staff involved in strategy and improvements.
 

Data Collection

The data underlying this report are primarily drawn from Norðurál’s operational, environmental, and safety systems. Efforts have been made to ensure alignment with ESRS metrics, as well as the quality and reliability of data. Responsibility for data and calculations lies with both the Sustainability Steering Group and key managers across business areas.

The Double Materiality Assessment, carried out by Langbrók ehf. in consultation with management and stakeholders, serves as the foundation for identifying material topics, priorities, and scope in the report.
 

Analysis of material impacts, risks and opportunities ESRS 2 IRO-1

Norðurál has systematically assessed key risks and their potential financial impacts. As part of this, the company has conducted sensitivity analyses of key variables in its operating environment related to sustainability, with the goal of further integrating risk management and financial planning.

The analysis considers how changes in major external factors – such as electricity prices, raw material costs, and carbon pricing – could impact the company’s EBITDA and profitability. In this context, Norðurál has also assessed potential investment needs required to meet climate and environmental targets.

The objectives of this analysis are:

• To understand the financial impact if sustainability risks materialize and how this would affect profitability and investment requirements.
• To strengthen decision-making and investment prioritization in support of energy transition, carbon neutrality, and the circular economy.
• To better integrate sustainability and financial planning through updated risk management systems.

Norðurál continues to develop these assessments, particularly regarding Scope 3 emissions, supply chain data collection, and new circular solutions that support evaluation of financial impacts from sustainability risks.

The Double Materiality Assessment also supports this work by providing a clear prioritization of sustainability risks and opportunities, both in terms of the company’s impact on society and the environment, and the impact of sustainability issues on the company’s operations. Further development of the assessment will expand its scope to include additional key stakeholders of Norðurál.

 

Double Materiality Assessment ESRS IRO-2

Work on a Double Materiality Assessment began in 2024 as a prerequisite for implementing sustainability disclosures under the European CSRD (Corporate Sustainability Reporting Directive) and the ESRS (European Sustainability Reporting Standards). The purpose is to identify Norðurál’s most material sustainability priorities, considering both internal and external perspectives on sustainability in the company’s operations. The assessment addresses the company’s key sustainability risks and the environmental and social factors with the greatest financial impact on Norðurál.

The materiality of sustainability factors is evaluated to map the company’s impacts on the environment, society, and economy. The results of the risk assessment are then integrated into Norðurál’s overall risk management system to reduce the likelihood of adverse conditions. The outcomes of the materiality assessment form the foundation for topic selection in Norðurál’s Annual and Sustainability Report.
 

List of Material Topics ESRS IRO-2