General basis for preparation of sustainability statements ESRS BP-1

Norðurál ehf., a subsidiary of Century Aluminum Company, operates an aluminum smelter in Grundartangi in the western region of Iceland, where aluminum with a low carbon footprint is produced. The company only uses renewable electricity from hydroelectric power and geothermal energy for production, and the company’s products are sold in international markets, mainly to the automotive industry, the construction industry, and the electricity sector.

Norðurál’s business model is based on efficient and low-carbon aluminum production, and sustainability is increasingly integrated into the company’s strategy. This development reflects both the growing expectations of stakeholders and the changing competitive landscape of the aluminum market, where the emphasis on carbon footprint, traceability and social responsibility is increasingly important.

 

Norðurál’s management system and main sustainability focuses are:

• Climate – Minimization of greenhouse gas emissions (Scope 1, 2, and 3),
• Responsibility towards employees, safety and occupational health and safety,
• Environmental management and eco-friendly production methods,
• Responsible management of the value chain and supplier network,
• Transparency and improvements in governance.

Norðurál operates under an integrated management system that covers all aspects of the operation, including quality, environmental issues, occupational health and safety, social responsibility and management information.

The core of the management system is Norðurál’s Quality Manual, which contains formally defined processes, work instructions, the delegation of responsibilities and focus groups. In addition, an electronic feedback system is used, where employees and contractors record incidents, hazards and improvement suggestions. Feedback is followed up with analysis, preventive actions and systematic improvements.

The management system covers all of the company’s operations and includes all employees, contractors and business associates. The system promotes continuous improvement, in the spirit of the PDCA cycle (Plan–Do–Check–Act), in accordance with the ISO standards that Norðurál operates according to (ISO 9001, ISO 14001 and ISO 45001).

 

Certifications and quality standards

Norðurál operates according to internationally recognized standards for quality, environmental responsibility and safety:

• ASI certification (Aluminium Stewardship Initiative): In 2020, Norðurál received ASI certification for responsible and environmentally friendly production and was recertified according to the updated ASI Performance Standard in 2023. The certification confirms that the company’s operations meet strict requirements for social and environmental responsibility, and good practices in aluminum production. The next audit will take place in 2026. ASI is a multi-stakeholder organization which unites interests from the entire value chain, including manufacturers, environmental organizations and consumer brands.li>
• ISO certifications: Norðurál has a certified quality management system (ISO 9001), an environmental management system (ISO 14001) and an occupational health and safety management system (ISO 45001). These systems are integrated under the PDCA (Plan-Do-Check-Act) approach and maintained through regular internal and external audits. The first certification took place in 2012–2013 and is maintained with audits twice a year.
• Equal Pay Certification: Norðurál is an equal pay certified company according to Icelandic standard ÍST 85:2012, and a recipient of PwC’s Gold Certificate.
• LME listing: By meeting the requirements for responsible procurement (including in accordance with the OECD guidelines) and being certified according to the above standards, Norðurál meets the requirements of the London Metal Exchange (LME) for registered trademarks.

 

Implementation of ESRS and sustainability reporting

Norðurál now publishes its second annual and sustainability report in accordance with the Corporate Sustainability Reporting Directive (CSRD) legislation and the European Sustainability Reporting Standards (ESRS) criteria. The report covers the 2025 fiscal year and is based on the data, processes and management systems that exist within Norðurál and the Century Aluminum Group.

Since fiscal year 2021, Norðurál has published social and sustainability information according to the Global Reporting Initiative (GRI) standards. While the implementation of the ESRS standards has been based on that foundation, the company has continued to develop governance, data management, and disclosure to meet increased demands for transparency and comparability.

In 2025, a Double Materiality Assessment was conducted in accordance with the ESRS requirements. The analysis was conducted in collaboration with the consulting firm Langbrók and included an assessment of the impact of Norðurál’s operations on people and the environment, as well as the risks and opportunities that sustainability factors can have on the company’s operations and performance. The results of the analysis form the basis for the selection of material and disclosure in this report. The responsibility for implementing the ESRS standards and monitoring the sustainability goals lies with the Sustainability Steering Committee. The group includes key executives, including the Managing Director and Plant Manager of Norðurál, the Manager of Communications and PR, the Manager of Safety, Environment and Improvement, and the VP Sustainability at Century Aluminum.

The Steering Committee meets regularly and oversees the progress of sustainability projects, the coordination of data and disclosure, as well as ensuring a consistent approach to sustainability issues within the company and towards the parent company.

Norðurál’s Safety, Health and Environmental Committee oversees the implementation of safety, health, and environmental objectives. The committee is composed of representatives of the Executive Board, safety representatives, and safety specialists. The committee’s work is also supported by expert councils and production staff who contribute to strategy development, risk management, and continuous improvement in the company’s operating areas.

 

Data collection

The data that forms the basis of the report comes mainly from Norðurál’s operational, environmental and safety systems. Efforts have been made to ensure compliance with the ESRS standards and the quality and reliability of the data to the best of our ability. Responsibility for data and calculations is a collaborative project between the steering committee and key area managers.

A double materiality assessment conducted by Langbrók ehf. in consultation with managers and stakeholders forms the basis for determining the approach, topics, and priorities in the report.

 

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

Norðurál has worked systematically on the assessment of the main risk factors and their potential financial impact. In this context, the company has conducted a sensitivity analysis of key variables related to sustainability in its operating environment, with the aim of further integrating risk management and financial planning.

The analysis reflects how changes in key external conditions – such as electricity prices, raw material costs and carbon tax – could affect the company’s EBITDA and profits. In this context, Norðurál has also assessed the potential scope of investments necessary to meet climate and environmental management objectives.

The objectives of the analysis are:

• To understand the financial impact if sustainability risks materialize, and how this affects performance and investment needs.
• To strengthen decision-making and prioritization in investments that support the energy transition, carbon neutrality and circular economy.
• To better integrate sustainability and financial planning through updated risk management systems.

Norðurál continues to develop these analyses, especially with regard to Scope 3 emissions, data collection in the supply chain and new circular solutions that support the assessment of the financial impact of sustainability risks.

The double materiality analysis also supports this work by clearly prioritizing risks and opportunities related to sustainability, both in terms of the impact of the operations on society and the environment and the impact of sustainability issues on the company’s operations. Work will continue on the double materiality analysis to encompass more of Norðurál’s key stakeholders.

 

Double Materiality Assessment ESRS IRO-2

Work on the Double Materiality Assessment began in 2024, and this effort is a prerequisite for the implementation of sustainability reporting according to the European CSRD (Corporate Sustainability Reporting Directive), European Sustainability Reporting and an Information Standard in the field of sustainability and climate issues, ESRS (European Sustainability Reporting Standards). The purpose is to map Norðurál’s most important sustainability focuses, considering internal and external perspectives on sustainability in the operations. The materiality analysis addresses the main sustainability risks in the operations and explores which factors in the environment and society have the greatest impact on Norðurál’s finances.

The materiality of sustainability factors is assessed to map the impact of operations on the environment, society, and economy. The results of the risk assessment are subsequently incorporated into Norðurál’s general risk assessment, which is intended to reduce the likelihood of adverse situations arising. The results of the materiality analysis form the basis of Norðurál’s Annual and Sustainability Report.

 

List of material aspects ESRS IRO-2