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Corporate Social Responsibility – Invitation to Action

Dear Hydro Colleague
Our Hydro culture is firmly rooted in principles
of honesty and consideration for others, and
compliance with applicable rules and regulations,
wherever we are. This culture is developed further
through The Hydro Way and our mission –
to create a more viable society. This means that
our operations must satisfy high standards, with
regard to ethical behaviour, respect for human
rights, health and safety for our employees, the
fight against corruption, and other aspects of
our corporate social responsibility. Our ability
and dedication to perform accordingly has been
critical to our success so far. In the future, these
concerns will probably be even more important
for our long-term survival and success as a company
involved with the exploitation and use of
natural resources, and their development into
products in innovative and efficient ways. Trust in
the market place and a good reputation are key
issues.
As globalization and the rate of change increase,
new demands are placed on forms of cooperation,
organizational development, and the
application of knowledge. We must seek coope-
ration with authorities both on national and local
levels, and with host communities for our operations.
Some non-governmental organizations
(NGOs) possess professional competence and
capacity which can be of great value to us in our
work to realize our ambitions, while at the same
time helping them achieve their objectives.
We issued a corporate directive in 1995,
which established certain standards that should
apply to all of Hydro’s activities. That document
provided a timely basis and framework for both
company management and other employees in
the field of business behaviour.
We have updated and revisited our corporate
directives, and introduced a new directive on
our social responsibility, and a Code of Conduct
on our ethical accountability.
Principles and directives are a good start,
but the real job is to make them an integral part
of our way forward. It is my hope that this
“Invitation to Action” will assist all of us in that
enterprise.
I encourage you to use these tools to integrate
social responsibility issues in strategies,
business plans and day-to-day work in a consistent
and accountable manner. By doing so, we
will continue to build a corporate culture which
we will all want to identify with.
Eivind Reiten, President and CEO
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Contents
Introduction 5
Basic Principles & Key Issues 8
Human Rights 10
Contribute to Sustainability 14
Diversity 18
Dialogue 22
Integrity 24
Our Code of Conduct 28
Framework for Implementing CSR 30
Social Knowledge 33
Anticipating Issues 35
Social Impact Assessment 38
Community Investments 40
CSR and Business Relations 43
CSR in Strategy, Business Planning and Reporting 46
Resources 48
Appendix 1
Hydro’s Social Responsibility Directive 50
Appendix 2
Hydro’s Code of Conduct 52
Photos: Michael Heffernan, Terje S. Knudsen, Jason Hawks, Kåre Foss, Jarle Ree, Dag Sunnanå, Rolf Lunheim, PhotoDisk
Design: Hydro Media, June 2004, 55049291
Printed by: Kampen Grafisk, September 2004
This publication is developed by the CSR Department

Introduction
Invitation to a Dialogue, our first publication on Corporate
Social Responsibility (CSR), was published in 2000. At
the time, it was considered quite an innovation. Since
then, the CSR agenda has evolved and the social aspect
of business now attracts increasing attention both within
our organization and in society as a whole.
Hydro has always taken special pride in doing
things that help build a better society. When
Hydro was founded 100 years ago, we helped
build a country, not just a company. That sense
of responsibility remains with us today. We have
developed our businesses in ways that contribute
more over time, not just to customers and
shareholders, but also to society in general.
Today all companies have to reconcile the
need for profit with the needs of society. In
Hydro, we believe business and societal
demands are inseparable and interdependent;
you cannot have real, long-term business success
without societal success.
Corporate Social Responsibility (CSR) is now
addressed in the public debate on sustainable
development, which has been extended to encompass
the social dimensions of business, in addition
to the financial and environmental aspects. These
are referred to as the triple bottom line.
As a prerequisite for fulfilling the company’s
social responsibility, each individual working for
Hydro needs to behave in an ethical manner. A
Code of Conduct has been drawn up to ensure
that all persons acting on behalf of Hydro perform
their activities in an ethical manner and in
accordance with applicable laws and Hydro
standards.
In the wake of corporate governance
scandals, public awareness and expectations
of business ethics and CSR have increased
significantly. The financial community may not
be perceived as progressive with regard to
social issues; nevertheless Socially Responsible
Investments (SRI) now constitute a growing
proportion of the total investment portfolio.
Hydro benefits directly from cultivating social
responsibility in its management systems, for
example through proactive risk management
and the benefits of a good reputation. However,
credible social performance that is viable in the
long-term must be based on the core values of
our corporate culture, as expressed in The Hydro
Way. These values are brought to life in the way
we relate to society and strive to optimize the
impact of our operations.
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6
"Hydro benefits directly from cultivating social responsibility in
its management systems, for example through proactive risk
management and the benefits of a good reputation."
Invitation to a Dialogue was our first pubilication
aimed at developing a socially responsive
company culture. It provides an outline of the key
issues, and the ensuing dialogue – based on the
voices of stakeholders – has increased our
understanding.
This publication is another step towards
embedding the concept of social responsibility in
our culture and business practices. Our social
responsibility directive states that CSR is a line
responsibility. The following is a practical guide to
help managers translate the CSR principles laid
down in the directive into sound business practice.
Managing social impact is a complex task,
and there are few “one size fits all” solutions.
Good CSR practice requires prudent consideration
of stakeholder concerns in the context of the
local culture and conditions in question. Invitation
to Action is not, therefore, a straightforward
instruction manual, but an inspirational guide to
help improve the management of social impact.
The governance framework and approaches
outlined in this publication should form the basis
for developing effective CSR practices in our line
organization in response to the challenges and
experience that arise.
At first glance, some of the issues presented
on the following pages may seem to have limited
relevance to day-to-day business operations in
developed host countries. However, diversity and
dialogue are definitly of importance in a European
context.
CSR challenges and priorities will, of course,
differ according to the business and the social
setting. However, everyone should acquire a
basic understanding of the key issues, with
reference to the Hydro value foresight. Social
issues that are insignificant today could be
critical for business tomorrow.
Our journey starts with the Basic CSR Principles.
The five basic principles – Human Rights,
Dialogue, Integrity, Sustainability and Diversity
– are presented with examples of related key
issues and dilemmas. Having the basic principles
fresh in mind should help you to identify
the CSR challenges in your business environ-

"This publication is another step towards embedding the concept
of social responsibility in our culture and business practices."
ment. The next chapter presents a Framework
for Implementing CSR, including approaches
to mapping social issues and integrating these
into strategy and management systems. With
an overview of issues and a strategy at hand,
you will be better prepared to develop the application
of CSR in your business planning and
reporting. This is briefly covered in the chapter
CSR in Strategy, Business Planning and
Reporting. Organizations and publications that
can provide further information and inspiration
are listed under Resources at the end.
The dilemmas presented are relevant to
Hydro’s business. These are meant to be a basis
for discussion, and you will not find the “correct
answer” on any page in this publication. These
are real dilemmas where only well informed,
on the spot decision-making will work.
Hydro’s directives are interrelated and should
be seen as a whole. Especially the People
Policy, Health, Safety, Security and Environment
Policy, and the Code of Conduct should be kept
in mind when working on CSR issues.
Hopefully, this publication will help you develop
and improve CSR practice and business
management, in accordance with our shared
values – The Hydro Way. The experience you
and your colleagues gain through translating
these principles into practice will form the foundation
for embedding CSR in our culture and
business practices.
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Basic Principles & Key Issues

This chapter gives an outline of the basic CSR principles defined in
the Social Responsibility Directive. Each section starts with a quote
from the directive, followed by an elaboration and identification of
key issues. Examples and dilemmas relevant to Hydro’s activities
are provided to encourage discussion and reflection.
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Human Rights
In 2001, Hydro received more than 1000 postcards and e-mails urging Hydro to address the human rights
situation in China when dealing with Chinese Authorities.
Why?
The Universal Declaration of Human Rights
comprises our common ethical fundament.
It represents the prerequisites for sound social
development and a well-functioning business
climate. It is important to recognize the interconnection
between good business performance
and human rights.
Key business challenges
Human Rights is a comprehensive issue,
including civil, political, economical, social
and cultural rights. However, within this range,
there are some specific issues that are relevant
to business. Further details on our policy in
these areas are provided in Hydro’s People
Policy.
Freedom of expression and association
All employees have the right to express their
views and concerns in good faith, for example
with respect to their working conditions, without
fear of reprisal. They also have the right to join
a union and participate in organized activities.
These fundamental principles apply to all Hydro
activities worldwide.
Labour standards
Hydro is committed to respect the International
Labour Organization’s eight core conventions.
Key issues are freedom of association, the right
to collective bargaining, and the prohibition of
forced labour. The conventions also address
some basic requirements for wages, working
hours, social benefits and the working environment.
These must be considered in the context
of legal requirements and best practices in the
country in question.

“Hydro supports the principles set forth in the Universal Declaration
of Human Rights. We shall make sure that all our operations are
conducted in accordance with basic human rights standards.”
HYDRO’S SOCIAL RESPONSIBILITY DIRECTIVE
Child labour
Hydro does not accept child labour and does not
employ children below the age of 16. If a child’s
rights of education, play, rest and family life are
secured, limited exceptions may be made if this
is clearly in the best interests of the child. This is
expressed in our People Policy.
The prohibition of child labour represents
a long-term social investment. Giving youngsters
the opportunity to attend school not only
improves the future prospects of the individuals
concerned, it also ensures a well-educated
workforce in years to come.
Armed security forces
In some of its locations, Hydro needs to employ
armed security forces to protect personnel,
property or business activities. It is important to
ensure that the employment of security forces is
properly controlled and does not result in abuse
of power or human rights violations.
The Voluntary Principles on Security and
Human Rights were developed on the basis
of discussions between the governments of
the United States and the United Kingdom, transnational
oil and mining companies, human rights
organizations and trade unions. The principles
provide a framework for how companies should
handle the use of security forces in accordance
with human rights. Hydro endorsed the principles
in January 2003.
Indigenous peoples
As natural resources are often located in
remote areas inhabited by indigenous peoples,
ensuring that such peoples’ interests and needs
are taken into consideration is an important
11
challenge for extractive industries. Operating
in such areas may be controversial. Indigenous
peoples often represent the weakest group in
society; they have limited rights and are at risk
of discrimination. They frequently lack formal
representation in governmental structures, so
it is difficult for businesses to consult with them
directly.
The concerns of indigenous people
are voiced by numerous non-governmental
organizations (NGOs) worldwide, and developing
a constructive dialogue with these is crucial.
Indigenous peoples’ rights have also been
strengthened through international conventions
and national legislation.
Cooperation with Amnesty
Amnesty International Norway and Hydro
has a cooperation agreement on provision
of human rights education and information.
Amnesty is a valuable contributor to Hydro’s
management training programmes, and a
partner in general human rights discussions.
Amnesty has expertise on the human rights
situation in specific countries, and can assist
Hydro with information when entering countries
with major human rights challenges.
This partnership reflects Hydro’s CSR
strategy to build alliances with civil society
organizations in order to exchange knowledge
and competence for mutual benefit.
The agreement does not limit Amnesty’s
right to freely criticize Hydro.

12
Human Rights
Freedom of Association
The UN Universal Declaration of Human Rights
clearly states that employees can protect their
interests through trade unions. In the principles
of the UN Global Compact, freedom of association
implies respect for the employees’ entitlement
to join associations of their own choice.
In Europe, these associations are generally
labour unions, and Hydro has good experience
of constructive dialogue between management
and trade unions. However, employees may prefer
different forms of cooperation in other parts of
the world, such as China and North America.
During the establishment of a Hydro production
plant in Canada, several labour unions offered
to protect the interests of the employees. In
the Canadian system, employees can vote to
join a union by a defined majority, and the unions
were actively promoting the benefits they could
offer. However, the employees did not want to
The UN Universal Declaration of Human Rights
Article 23
1. Everyone has the right to work, to free
choice of employment, to just and favourable
conditions of work and to protection against
unemployment.
2. Everyone, without any discrimination,
has the right to equal pay for equal work.
3. Everyone who works has the right to just
join any of these unions, preferring to negotiate
through an internal works council. They felt that,
in their particular local circumstances, this was
the best way of establishing a real dialogue, in
which the employers and freely-chosen employee
representatives could reach an understanding
of each other’s problems and find ways to resolve
them. If the employees at any time found this
solution was not satisfactory, they could vote for
inviting the support of a union. Thus they retained
their right to protect their interests through
trade unions.
The formal structure of cooperation is not the
main issue, but it is important to lay the ground
for open discussions, which culminate in jointly
acceptable agreements. A constructive rather
than confrontational dialogue brings about solutions
that benefit the enterprise, its stakeholders
and society at large.
and favourable remuneration ensuring for
themselves and their family an existence
worthy of human dignity, and supplemented,
if necessary, by other means of social protection.
4. Everyone has the right to form and to join trade
unions for the protection of their interests.

Dilemmas:
You are a Hydro manager, going abroad to
work at a recently acquired business unit. On
arrival, you find that the employees work much
longer hours than is allowed in the Hydro policy.
You present the policy, and demand regular working
hours. Many employees quit, because they
are used to working long days in order to better
support their families. They are not familiar with
the concept of leisure time. What do you do?
Hydro acquires a production plant that has
traditionally employed several children between
12 and 16 years of age. Their main tasks are
packing products and sweeping floors. The
children’s income is important for their families,
and in some families this is the only income
as the parents are out of work and the other
children are even younger. Even if these children
were taken out of work, the possibility of them
attending school is very limited, at least in the
near future.
When Hydro takes over the plant, Norwegian
NGOs become interested and want information.
How do you handle this situation?
Local management at the same plant strongly
advises against the employees joining a union.
The reason they give is that the unions in this
country are very militant and do not promote the
real interests of the employees. Hydro consults
the Norwegian Confederation of Trade Unions
(LO), which says that they have a good impression
of the central union in this country, and that
they have been advising them for many years.
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They ask Hydro to let the unions introduce
themselves to the employees, so that they
can evaluate their options freely.
When this is brought up with the local
management, it becomes clear that their real
reason for discouraging union membership is
the risk of higher costs through increased wages
and benefits. They claim that this may turn the
plant’s small profit into a loss, which could again
lead to plant closure and job losses. Hydro’s
accountant confirms that this could be the
case. LO wants to know the outcome of the
discussion. How do you deal with this?

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Contribute
to Sustainability
Why?
Sustainability comprises both the economic, environmental
and societal dimension of business. In
this document, we focus on the social dimension.
Today companies find they are in a dilemma,
caught between investor demands for short-term
profits and society’s general expectations of a
responsible and long-term approach. Foresight
should be a virtue in all of Hydro’s business
thinking, and the challenge is to be able to strike
a mindful and constructive balance between
short-term and long-term interests.
Sustainability is needed for a favourable
long-term business climate. Hydro has always
been aware that constructive relations to local
communities benefit both the local population
and the company’s own operations.
Social investment projects
Hydro cooperates with local communities in
various ways with a view to contributing to sustainability,
and has a wide range of social investment
projects. Hydro aims to make these projects
independent in a way that secures their viability
also without the company’s support.
Social investments that add to Hydro’s
competitive advantage are to be preferred, and
they should be in line with our business strategy.
There are many types of social investments: charitable
donations, community projects, voluntary
engagements, etc. Rather than giving random
philanthropic contributions, the investments chosen
should have the best possible effect, both for
our business and for society. In some cases this
means making charitable donations, in others it
means running a long-term project. In most cases,
the best choice is a mix of social investment types
directed towards the same end. The amounts
used on social projects should reflect the local
business’s financial situation and its strategy.
Contributions can take many forms, and do not
necessarily have to involve huge investments.

“Through developing profitable business and active engagement
with local communities, we aim to ensure that our business practices
contribute to long-term economic and social development. We will
work with government and civil society to define roles and responsibilities
for social development.”
HYDRO’S SOCIAL RESPONSIBILITY DIRECTIVE
Local content
An important element of sustainability is to involve
the local community as much as possible in
projects and operations. This stimulates the local
economy and contributes to a viable society.
When Norway was developing as an oil nation,
the use of local suppliers and contractors was
of major importance. This created employment
also outside the direct oil activities and has led
to innovation and an internationally competitive
supplier industry.
With this in mind, Hydro has initiated a supplier
survey in Northwest Russia, with the aim of having
a qualified supplier industry in this region when it
is time to develop oil projects in the Barents Sea.
We know from Norway that this is a long-term and
demanding process, but indeed rewarding for the
local society.
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Sustainability
Social projects in Angola
When oil companies gain access to natural
resources in a developing country, contributing
to sustainable development of the country is an
important challenge. The development of a viable
and competitive oil industry is in itself a major
contribution, but it does not create a great deal
of employment. The revenues do not always
benefit the people and the operations often take
place in remote areas far away from the communities
themselves. Hydro’s approach in Angola
is an effort to increase the country’s capacity to
be self-sufficient through transfer of technology,
education and community development.
Hydro has been doing business in Angola
since the early 90s. Our most important exploration
project so far relates to the so-called Block
34, where Hydro is technical assistant to
Sonangol, the state owned oil company. Hydro
also has interests in other blocks. Community
investments and other social projects are financed
both by annual allocations related to the
various blocks and by contributions direct from
Hydro. These projects cover a variety of areas:
community development such as health improvement
measures and construction of schools,
rehabilitation of children traumatized by the
war, institutional support to develop government
agencies, assistance to environmental associations,
and provision of scholarships to university
students from low-income families.
Based on a cooperation agreement between
Hydro and Sonangol, a comprehensive management
and technology transfer was set up to help
Sonangol become a competent and competitive
offshore deep-water operator by international
standards.
This cooperation agreement included two
major social projects financed mainly with funds
from the signature bonus paid by Hydro for
Block 34, which is a better targeted application
of the bonus than cash payment to the government.

Dilemmas:
Hydro is about to establish a new business. To
support the local community, Hydro’s policy is to
employ a high proportion of local people, as long
as they have the right qualifications. Hydro has a
positive dialogue with the local government and
various organizations, and close cooperation has
been established. Having good relations with
One project was the establishment of
the Management and Technology Transfer
Programme, as a further step towards the development
of Angola as an independent oil nation.
Young Angolans are given educational opportunities,
with a preparatory year in Luanda, followed
by four years of university studies in the UK,
mainly at the University of Aberdeen.
The first five students in this scheme graduated
in 2003. Two of them joined Sonangol as
oil experts, while three have continued studying
for a higher degree, also financed by the
programme. Over the next years, more than
thirty students will graduate to boost Angola’s
growing oil competence. In connection with this
process of “Angolization”, Hydro has transferred
the responsibility of the further follow-up of the
programme to Sonangol. Hydro will, however,
still be involved in its management.
A similar transfer of responsibility has taken
place in Hydro’s other project, the Quenguela
17
these groups is essential to get the business running.
When the employment process starts, one
influential politician demands that his son is
appointed to an important management position.
The son is qualified, but he is not the best applicant.
What do you do?
Water System and Agricultural Programme. This
is a development project for a community outside
Luanda, where oil production had previously
taken place and geological data showed water
reserves. The project involves the drilling of water
wells and distribution of water, establishment of
water filling stations, improvement of infrastructure,
construction of plants for egg production,
manioc processing and water-bottling, and the
construction of wash houses and three schools.
The project promotes a sustainable way of life
in a rural area inhabited by several thousand
people, mostly refugees, who have been displaced
from other parts of Angola during the war.

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Diversity
Why?
Respect of the inherent worth of all people is
a core value in Hydro, and encouraging and
respecting diversity is an inherent element of
respect. This improves utilization of the full
potential of the organization.
Diversity can be a source of creativity, efficiency
and constructive ties with communities and
individuals. Or it can be a source of conflict and
social exclusion. Diversity in the forms of gender,
disability, sexual orientation, marital status, age
and political opinion is found in all communities.
Our employment policies and organizational
culture must, therefore, keep diversity in mind
and monitor the extent to which we are able
to realize the potential resources that people’s
differences represent.
Globalization means that our employees
and operations encounter cultural variations to
an increasing extent. In order to promote mutual
understanding and peaceful cooperation, it
is essential that we approach people and
communities of different cultures with respect.
Although the values and practices in other
cultures may appear incompatible with our
own, we should always strive to understand
other viewpoints and recognize the intrinsic
value of cultural variation as a source of identity
and belonging.
This fundamental respect extends to cultural
heritage in the forms of artefacts and other
manifestations of cultural traditions. We must
always consider the impact of our operations
on the cultural heritage of our host communities
and mitigate any potential negative consequences
as best we can.

“Hydro will not discriminate on the basis of gender, religion, race,
national or ethnic origin, cultural background, social group, disability,
sexual orientation, marital status, age or political opinion. We recognize
the intrinsic value of the different cultures in which we operate,
and will show respect for these cultures in all our business practices.
Hydro will pay special attention to the rights, requirements and
cultural integrity of indigenous people affected by our operations.”
HYDRO’S SOCIAL RESPONSIBILITY DIRECTIVE
The Quilombos people
Since the 1970s, Hydro Aluminium has had a
five per cent stake in the Brazilian company
MRN, which operates the Trombetas bauxite
mine in the Amazon region of Brazil. Although
the equity holding is small, the mine is regarded
as a Hydro operation, at least by outside observers
in Norway.
A village with all modern facilities was built at
Trombetas for expatriate employees of the
mining operations. This “island of wealth” exists
right next to the river communities of the
Quilombos, a marginalized people descended
from slaves who escaped from plantations in the
19th century. The Quilombos have only recently
been recognized as an indigenous group in line
with the Brazilian Indians.
The MRN operations have been an industry
benchmark in terms of environmental protection
19
and reforestation, however local recruitment and
support for the river communities have so far
been limited.
Recognizing the intrinsic value of cultural
diversity, MRN has now taken several initiatives
to help preserve the Quilombos’ lifestyle and
culture, while at the same time channelling funds
for developing areas such as health, education
and alternative livelihoods in the river communities.
These contributions are channelled through
national and local NGOs that are supporting
the Quilombos to become properly organized in
claiming their land rights and other entitlements
due to them under the Brazilian constitution.

20
Diversity

Dilemmas:
In some Muslim countries, foreign women
are not permitted to travel into certain districts
where entry requires a special passport. Hydro
operates in some of these districts, and some
women managers from Europe need to visit
one of these operations in connection with
their work. Passports are denied; the managers
are quite offended and ask the local Hydro
representatives to appeal against this decision.
The local Hydro representatives know that
such appeals will not be well received by the
local authorities and may undermine cooperation.
How far would you provoke the authorities
in order to facilitate such a visit? How would
you explain this situation to the women managers?
Hydro wants to build a factory in a poor area
inhabited by tribal people. Local and international
NGOs oppose the plans, because they fear
the vulnerable tribal culture and the traditional
way of life in the villages will be destroyed. The
local government supports Hydro’s activities.
They prohibit the local NGOs from taking action
and imprison some of their activists. What do
you do?
21

22
Dialogue
Why?
Cooperation is a core value in Hydro, which we
understand to mean working with others in an open
and inclusive way. Dialogue is an essential factor.
Dialogue promotes confidence and understanding
between the local community and Hydro, and
helps solve problems that might arise.
Engaging in dialogue with local stakeholders
can promote a fertile business climate. It can lead
to the recruitment of local employees, and can
make them more motivated to contribute to a
favourable development of Hydro’s local business.
Dilemma:
You are in charge of two Hydro factories operating
in the same market. Both are facing rising
costs, and you need to close down one of them.
One factory is located in an industrial area, close
to a town, and the other is located in a rural area
with no other major businesses nearby. To save
costs, one of the factories should be closed. It is
Systematic stakeholder cooperation
Engaging in dialogue with our stakeholders means
they are taken into consideration when business
decisions are made. The first step is to identify stakeholders:
the institutions or persons who will be
affected by our operations or are otherwise of
importance to us. Then we have to find out how to
communicate with them in the best possible way,
and develop an approach that will foster a constructive
dialogue. Systematic dialogue is especially
important when operating in small communities.
You will find more details on how to develop
a fruitful dialogue in the next section.
most cost efficient to keep the factory in the
industrial area in operation. Both local authorities
and trade unions are in favour of retaining the
other factory, since there are no other alternative
employment opportunities in the rural area. What
are the challenges and risks you have to consider
in this situation? What would you choose to do?

“We are prepared to enter into an open dialogue with relevant
stakeholders to ensure that our activities are properly adapted to
meet local conditions and generate positive benefits both for the
company and the community. We shall give attention to initiatives
and input which serve to improve our social responsibility standards
and practices.”
HYDRO’S SOCIAL RESPONSIBILITY DIRECTIVE
Dialogue vital in restructuring processes
Hydro is exposed to strong competition in global
markets and has to continuously adapt to change.
This can make it necessary to restructure operations,
which can be a painful process involving plant
closures and reduction of manpower. An open and
constructive dialogue before and during such processes
has always proved valuable. There may be
different opinions about the need to downsize, but
once the decision is taken, we have found that
management and employee representatives have
been able to work together to find the best solutions.
The alternative is labour unrest and strikes,
which both parties regard as less favourable.
Dialogue has made it possible to find effective ways
of providing new jobs and developing widely accepted
social plans. It has also brought to light the
importance of training and skills development, not
only for the employees’ present jobs, but also for
their general employability.
In change processes, a good dialogue between
the company and the local community is also
important to promote understanding of the reasons
23
for the change and an open discussion on how
to limit negative effects in the community.
We have gained experience from several
restructuring cases in recent years, such as the
closures and manning reductions in connection with
the downsizing of Hydro's former fertilizer operations
in several European countries. The importance of a
constructive dialogue was also demonstrated when
the magnesium plant at Porsgrunn, Norway, was
closed down. The closure proved to have a much
more limited effect on the employees and the community
than originally forecasted. A similar dialogue
is currently being held in connection with the reduction
of activities at some of Hydro's aluminium plants
on the west coast of Norway, where old technology
that is unable to meet the new, more stringent environmental
requirements is being phased out.
Positive social dialogue and responsible
restructuring are key issues also for the European
Commission in its ongoing development of the
CSR approach in the European Union.

24
Integrity
Why?
Corruption leads to poor utilization of resources.
It is a major barrier to economic and social development,
and poses a serious risk to the sustainability
of business, undermining both reputation
and shareholder value. Corruption is costly; business
opportunities can be lost due to contracts
being awarded, not on the basis of price and
quality, but to those who pay the highest bribes.
Focus on integrity and transparency is
expected to increase in the coming years, and
Hydro wants to be at the forefront in relation
to legislation as well as general developments.
An important document in this connection is
the OECD Convention on Combating Bribery of
Foreign Public Officials in International Business
Transactions. It has been signed by 29 OECD
countries, including Norway, and has been
integrated in Norwegian legislation. As stringent
domestic and international legal frameworks
are drawn up, companies will increasingly be
exposed to tough sanctions if they do not comply
with the convention.
Facilitation payments
Facilitation or “grease” payments” are minor
payments made to secure or expedite the performance
of a routine or action to which the payer
has legal or other entitlement. Examples are paying
a few dollars to get goods through customs
or to unload a shipment within reasonable time.
In principle, facilitation payments are as bad
as any other form of corruption, and they pose a
serious threat both to the conduct of business,
and the process of building sound structures in
societies that are undermined by corruption.
Hydro works to identify and eliminate facilitation
payments, in accordance with the recommendations
from Transparency International.

“Hydro shall maintain high standards of integrity. This means that
we shall be honest and fair in all our dealings. We shall not permit
or tolerate engagement in bribery or other forms of corruption.”
HYDRO’S SOCIAL RESPONSIBILITY DIRECTIVE
Peter Eigen, founder of Transparency International,
and CEO Eivind Reiten agree on the need to fight corruption.
Global engagement
Hydro cooperates with civil society networks
and organizations with the aim to fight corruption,
such as Transparency International (TI), an international
NGO, and the Extractive Industries
Transparency Initiative. The partnership with
TI reflects Hydro’s CSR strategy to build alliances
with NGOs with special competence and knowledge
in areas relevant to Hydro’s activities.
Hydro is actively involved in TI’s work to
develop principles and guidelines for companies
on how to fight corruption. The TI Business
Principles for Countering Bribery are also
applicable to private-to-private transactions,
as distinct from the OECD Convention, which
is limited to the bribery of foreign public officials.
25
The Hydro Integrity Programme
Integrity is a major issue in the Code of Conduct.
As a first step in developing a Hydro Integrity
Programme, a complaints and concerns channel
has been set up. Employees can use this to
report unethical business conduct, which they for
various reasons cannot report within their local
organization. This is a corporate channel that
leads directly to the head of Internal Audit
Corporate.
Hydro will develop the integrity programme
further to ensure the implementation of our integrity
standards throughout the organization. An
important element of the programme will be
Transparency International’s Business Principles
for Countering Bribery which, together with other
sources, will contribute to informing and training
employees with regard to corruption and related
challenges.

26
Integrity
Signature bonuses and transparency
Angola is an oil rich country and suffered for
many years from a civil war, which required a
large part of the revenues from oil and other
natural resources. The war has now ended,
but despite the significant oil revenues, much
of the population is living in conditions of extreme
poverty with an average life expectancy of 45
years. Income from oil companies accounts for
nearly ninety per cent of government income.
The International Monetary Fund (IMF) has
claimed that huge amounts have been unaccounted
for in the Angolan state finance budget. It has
been reported that much money has been transferred
to foreign bank accounts and tax havens,
and there has been increased pressure on the
Angolan and other governments to account for
the management of the oil revenues.
Hydro has been present in Angola since
1998 and was at that time applying for participation
in a promising deep-water block. As in many
countries, oil companies in Angola are required
to pay a signature bonus as an entrance ticket
for attractive blocks, and this applied also for
Hydro and the other companies according to
their contract with the state oil company
Sonangol.
The dilemma was that the amount of the
signature bonus could not be disclosed due
to a confidentiality clause in the contract. Even
if the oil companies wanted full transparency
of such payments, a breach of the contract
could have serious consequences for the
companies’ future in Angola. What Hydro and
some other companies did, was to refer to the
public accounts which the companies had to
file according to national law.
The confidentiality clauses were heavily
criticised due to the consequences for Angolan
society, and many organizations were urging
oil-producing countries towards transparency in
the management of oil revenues. In 2003, the
Angolan government disclosed the amounts paid
for this block to IMF, which released Hydro and
its partners from the confidentiality obligation.
The payments were fully accounted for, and the
figures coincided with those traced by IMF as
having been transferred to the Angolan Treasury
bank account.
The Angolan government has since increasingly
disclosed payments received from oil
companies, and lack of transparency with
respect to such payments is expected to be
less of a problem in the future. Hopefully, this
will create more open societies, to the benefit
of the people in countries with valuable natural
resources.

Dilemmas:
Looking for business opportunities in a new
region, Hydro identifies a very interesting project
in country Y. A National Oil Company and an
International Oil Company currently hold the licence.
An acquisition of a minority position in the
licence would fit perfectly with Hydro’s portfolio
and strategy. The majority of the population of
country Y lives in poverty and the corruption level
is high.
Hydro discovers a service contract with
a consultancy company in addition to the
Production Sharing Agreement (PSA). The company
has an overseas address and is registered
in a Caribbean tax haven. The ownership of the
company is not clear. The company provides a
variety of services to the licence related to facilitating
communication and negotiation with government
authorities. The agreed remuneration includes
substantial success fees and revenues from
oil production. Our partners are not in favour of
changing this arrangement. How should Hydro
proceed in this case?
Hydro plans to invest in a mining company in
Asia. You are responsible for concluding the deal.
While visiting the country, arrangements are made
for you and your spouse to stay at a luxurious
hotel, you are taken out to expensive dinners,
and at the end of your stay you are given a fine
and valuable piece of art. How do you handle
this situation?
27
Hydro acquires a factory in country X.
A large number of official documents have to
be produced within a short period of time. If not,
the business cannot start running. The most
critical problem is work permits. It takes several
months to get them through the authorities.
It is, therefore, common practice to order permits
through an agency that can arrange for permits
to be drawn up in two weeks for a reasonable
amount of money. You understand that speeding
up the process might involve corruption. What
do you do?

28
Our Code of Conduct
The main purpose of our Code of Conduct is to
ensure that all persons acting on behalf of Hydro
perform their activities in an ethical manner and in
accordance with applicable laws and Hydro standards.
This internal discipline is a prerequisite for
fulfilling the company’s social responsibility.
Everyone is expected to live up to Hydro’s
values through showing responsibility and respect
in relation to colleagues, business connections
and society as a whole, and through a high level
of consideration, honesty and integrity. It is impossible
to make individual rules for every workrelated
situation that could arise in a large company
like Hydro. As a rule of thumb, all employees
should use common sense, care and consideration.
To complete this rule of thumb, the Code of
Conduct gives more precise rules in important
areas.
Breaches of the Code of Conduct will not be
tolerated and can lead to disciplinary measures,
dismissal, or – in some cases – criminal proceedings.
If you suspect unethical business conduct
in relation to Hydro’s activities you should normally
report it through your local organization. If this is
difficult in your case, you can contact the head of
Internal Audit Corporate directly.
The Code of Conduct is printed in full at the end
of this document. The content relates to:
■ Equal opportunities
■ Conflict of interests and integrity,
including corruption
■ Compliance with legislation and regulations
■ Maintaining records and giving full, accurate
and clear statements in financial reports and
in other public communication.
■ Responding to enquiries from
the media and others

Corporate social responsibility calls on Hydro as a company, but also
on the behaviour of each and every one of us who works in Hydro.
While this folder and Hydro’s social responsibility directive focuses on
the company’s responsibilities, the Code of Conduct focuses on the
responsibilities and the rights of each individual Hydro employee.
The Complaints
and Concerns Channel
If you suspect unethical business conduct
in relation to Hydro’s activities, and you cannot
report it through your local organization, you can
contact the head of Internal Audit Corporate
directly. Anyone making a report through this
channel will be treated with confidentiality and
may, if desired, remain anonymous. No one in
the company can criticize or penalize you for
contacting the relevant function in Hydro about
a breach of the law or the company’s guidelines
made in good faith. If this should happen, you
should contact your immediate superior, the
head of IAC, or the other functions mentioned
above, as soon as possible.
You can post your concern at the Internal
Audit’s intranet site, or you can email to
ethics@hydro.com, or fax to + 47 22 53 28 27.
You may report in your preferred language.
29

30
Framework for
Implementing CSR
Integrating our basic CSR principles into day-to-day business
is a challenge. This chapter presents a framework for basic
CSR approaches and practices. Hydro’s business areas are
expected to implement CSR within this framework, taking
into account their specific needs and organizational abilities.

32
CSR in the business planning process:
Project
idea
Baseline
study
Social knowledge
Anticipating Issues
Social Impact
Assessment
The figure describes the step-by-step process of
identifying CSR in project and business planning.
A preliminary CSR assessment (baseline
study) must be carried out before major commitments,
early in the project planning process.
A more thorough CSR assessment should be
carried out for each decision point (not shown
in the model), and social risks and opportunities
identified.
CSR assessments should be included in
regular business planning, and the situation
should be periodically evaluated. The findings
Social risk
identification Business
planning
Mitigating
measures
CSR targets
and action
plans
Project
planning
Time
Reporting
of these assessments should be taken into
consideration in project and business planning,
and they should be reported through the line.
Hydro is engaged in different businesses,
and is present in a variety of cultural and political
settings. The approaches will, therefore, differ
from one project to another. In most cases
specific knowledge and competence will be
necessary.
Useful sources of information are provided
in the last chapter.

Social Knowledge
Social knowledge is a prerequisite for good CSR management and for sound business
development. Social knowledge means insight, knowledge and understanding of the
societies and communities in which we operate. It includes history, religion, politics,
the social situation, culture, economy and the local business context we are a part of.
Without social knowledge, we cannot properly evaluate risks or make qualified decisions.
Suggested approach
Knowledge and understanding may be acquired
from within the organization, for example from
expatriates, local employees, or others with
relevant experience. Useful external sources
1. General country information:
Several agencies provide updated country and
culture information on the Internet, for example
consultancy agencies, leading NGOs, etc.
(See list under Resources).
2. Baseline Studies:
A social baseline study (preliminary CSR
assessment) is recommended for basic
knowledge of social issues in specific regions
or local communities. This will form the basis for
a good social impact assessment and further
project planning. These studies are normally
provided by independent expertise, for example
a local consultant with good standing and
integrity or an international consultant with
good contacts in several countries.
3. Internal knowledge and understanding:
Training in cross-cultural understanding within
our own organization is necessary to enable
us to utilize properly the information provided
by external expertise. Training must also be
given in local languages.
include stakeholders in general, as well as
consultants, authorities or non-governmental
organizations (NGOs). In many cases, a
separate study should be carried out.
■ Do not underestimate the
importance of social knowledge:
Social issues may increase
risks and undermine business
opportunities.
■ Obtain social knowledge
at an early stage: It is critical
to map the social situation
before project planning or
entering a country.
■ Do not limit access to social
information: Social knowledge
shall be made available to all
relevant staff.
■ Be aware of sensitive issues:
Relations to indigenous peoples,
human rights abuses, widespread
corruption, the significance of a
corner stone company, etc.
33

34
Development of social knowledge in Iran
In 2001, Hydro started a major oil exploration
programme in the Ilam province in the southeast
of Iran. A consultancy firm in Tehran was engaged
to draw up a social responsibility baseline
report. Representatives of this firm made regular
visits to our Tehran office to bring us up-to-date
on recent developments in the country.
Once a week, the Hydro office receives
the newsletter “Iran Brief”, covering the political
situation and the business climate. This is
supplemented with a monthly newsletter “Iran
Energy Focus”.
In 2003, the same consultancy firm issued
a new report for Hydro: “Recent Changes in Ilam
Province and Strategic Consideration”. This
covered the most recent social changes and
industrial developments, and options for social
investments.
Hydro’s representatives in Iran are actively
involved in stakeholder dialogues in order to
develop social knowledge and good relations
at national and local levels. Training programmes
to promote cultural awareness and intercultural
communication have also been set up.

Anticipating Issues
Social knowledge provides an overview and a basis for understanding social
issues. The next step is to identify the social issues that could be critical for
our activities. It is important that this is done before any major commitments
are made or significant resources are allocated. We can keep these issues
in mind in our business planning, and thus reduce costs in the event of
changing plans due to social risks.
Suggested approach
1. Identify key stakeholders:
Institutions or persons who will be affected
by our operations or who are of importance
to us for other reasons, such as local communities,
authorities, suppliers, customers,
advisors and NGOs.
2. Evaluate experience:
For example from other similar business
contexts and projects. This gives insight
into what can be expected and guidance
on how to handle a particular situation.
3. Develop a CSR plan:
On the basis of the input and conclusions
from the stakeholder dialogue, develop a
plan to respond to issues that may arise.
■ Listen to relevant stakeholders:
Make sure the concerns and advice
of important stakeholders are listened
to, evaluated, and responded to.
A superficial dialogue may increase
tension and limit opportunities.
■ Set the right level of expectations:
Dialogue creates expectations. Be clear
about what Hydro can and cannot take
responsibility for, and be careful not to
promise more than we can meet, for
example in the form of community
investments.
■ Use locals as intermediaries:
Especially in cultures that are very
different from your own. They can
also help set appropriate expectations.
■ Maintain your dialogue:
Stakeholders and their opinions may
change. Continue an on-going dialogue.
35

36
The Hydro experience in Utkal, India
During the 1990s, Hydro Aluminium was engaged
in developing a bauxite and alumina project
in Orissa in India. Hydro owned one third of the
company set up for the project, with two major
Indian industrial companies, Indal and Tata, as
equal partners. The project site was in a remote
area with a mixed population, predominantly
low caste Hindus and indigenous Khonds.
When Hydro entered the project in 1992,
India had just changed its economic policy
to allow foreign participation in joint ventures.
Indian authorities, both at federal and local
(state) level, thus encouraged foreign investment
in extractive industries. In line with official Indian
assimilation policy, little or no attention was
paid to indigenous groups that were living on
or close to areas with mineral resources.
However, both national and international
NGOs were increasingly directing their focus
to the rights and needs of these groups.
Hydro’s knowledge of Indian business culture
was limited, and so was the exposure of Indian
industrial companies to foreign norms and standards,
especially with regard to environmental
and social issues. Acknowledging that it was
playing on foreign turf, Hydro chose a strategy
where most local issues were left for the Indian
Joint venture partners to deal with.
There were many reasons why the project
made little progress during the 90s: conflicting
interests between national and local politics;
a bureaucracy unfamiliar with the requirements
of international industrial companies; a crosssection
of NGOs with various agendas, but with
the common denominator that they all purported
to be the sole protector of the interests of the
indigenous people, and thus made it difficult
for the project management to establish direct
communication with those affected by the
project. However, it must also be admitted that
the industrial partners had not given sufficient
attention to the important social issues that were
related to the project. Hydro withdrew from the
project inn 2002.
The Utkal project was extremely complex and
represents, therefore, a variety of the challenges
that companies must take into consideration when
they enter foreign and, as in this case, virgin
territory. At the outset, Hydro had little knowledge
of Indian political and business culture, or of the
issues pertaining to the indigenous population
at the site and their position in Indian society.
A better understanding would certainly have helped,
and was also gradually accumulated during
the course of the project. Hydro probably ended
up with as much knowledge of site conditions
and the indigenous Khonds as its Indian business
partners and most of the international
NGOs.
However, what is obvious in hindsight is that
we lacked the required systematic and thorough
approach, where all relevant issues are identified,
analysed and prepared for.

38
Social Impact Assessment
Closing down smelter capacity in Norway
To meet environmental requirements, Hydro
Aluminium must close down the Søderberg potlines
in Årdal and Høyanger by 2007. In addition
the Søderberg potlines at Karmøy must be shut
down by 2010. These plants on the west coast
of Norway are cornerstones of their respective
communities, and the economic and social impact
in Årdal, Høyanger and Karmøy will be significant.
To ensure the best possible outcome for the
local communities, a project was established to
analyse the situation and recommend actions. The
project group consisted of company management
and union representatives, and worked
closely with the local authorities. A social impact
assessment (SIA) was part of the project scope.
The actual SIA was performed by a Norwegian
consultant, based on scenarios given by the
company. The scope of the SIA included:
• Stakeholder mapping
• Impact on direct and indirect employment
• Impact on local economies
• Roles and responsibilities of all parties involved
• Mitigating measures and promote start up
of new companies

It is important to obtain social knowledge and anticipate issues at the earliest
possible stage of any project; the consequences of our presence must also be
mapped in a systematic way. A Social Impact Assessment (SIA) covers this. An
SIA can give valuable input to project design and planning, also in exit projects.
Suggested approach
1. Define the scope:
The scope of a SIA depends on the
size and type of the activity, as well as the
location. The scope should be based on
the baseline study, stakeholder dialogue,
and your social knowledge.
2. Ensure objectivity and
a balanced analysis:
A company engaged in a project
may not be seen as independent in its
evaluation. Therefore external expertise
may be advisable.
■ Select the right expertise:
To ensure competence, credibility,
neutrality, ethical standards, and stakeholder
acceptance.
■ Carry out the SIA at an early stage:
Make sure the SIA is carried out early
enough to provide input to project
design and planning.
■ Company and stakeholders
must be involved:
If a consultant makes the SIA,
both stakeholder and company
representatives must be involved
in the assessment process.
39

40
Community Investments
Hydro depends on viable communities and on maintaining good relations with them.
This can be promoted through social engagement in the communities in which we operate.
Community investment and engagement can have an impact at three levels: social issues
which are only indirectly connected to our operations, reduction of negative impact from
our operations, and enhancement of positive impacts from our operations. When a specific
area of investment is identified, all three types of engagement should be combined to
achieve the best results and highest impact.
Hydro may not have the right knowledge and expertise to implement community
projects. Cooperation and partnerships with NGOs and other relevant organizations
is necessary to achieve the best possible results. It is important that projects launched
by Hydro are in line with the local authorities’ strategies and plans in the area.

Suggested approach
1. Make a strategic and result-oriented
selection: Choose engagements that will
have the highest possible impact on the
community, and which best support Hydro’s
business, profile, and competitive position.
2. Take a systematic approach: Community
investments shall be based on systematic
impact assessments and business strategies.
3. Make the project sustainable: It is an
advantage that all aspects of the project
can be developed so they can continue
independently, without Hydro support. Plan
well and cooperate with other companies,
NGOs, the authorities etc, to ensure exit
possibilities and project sustainability.
4. Local focus: Maximize the local element
in the form of employment. Using local
suppliers will always be appreciated
and may even be legally required.
■ Be selective: Investments that are not
carefully assessed may have a negative
impact elsewhere in the community. For
example supporting one particular school
may cause negative reactions from other
schools, unless the selected institution
has a logical relation to Hydro.
■ Plan well: Unless proper planning and
follow-up of the investment is ensured,
the community gain may be low, and
the image of the company impaired,
for example if a community park is not
maintained properly.
■ Calculate the resources and competence
needed: If the requirements are
underestimated, there may be problems
during implementation. Good planning
and cooperation, for example with NGOs,
may prevent this.
■ Be aware of hidden agendas: Our
chosen investment could lead to an
unforeseen and undeserved advantage
for certain persons, for example, the
selection of unqualified students for
educational programmes due to their
family connections with decision
makers. This is a kind of corruption.
41

42
Ballet and Soccer for Education in Brazil
One example of a successful community
investment project is the Soccer for Education
programme at Hydro Aluminium Alunorte in
Brazil. This project aims to contribute to a
better-educated workforce in years to come,
and to strengthen the local community. The
programme started as a combined PR and
community project, the idea being to capitalize
on the Brazilian passion for football. A team of
young boys is selected to travel to Oslo to take
part in the Norway Cup football tournament once
a year. The team members are picked from local
communities, where students with good school
performance and behaviour in addition to
sportsmanship, are preferred. In addition,
an educational award process has been
established, which runs a series of lectures
for both students and parents on health,
social behaviour and environment.
According to local management, these
projects have given visible results both in
relations between the plant and the community,
and more motivated students. Hydro Alumínio
Acro also has a Social Responsibility Program.
The Transformation through Education
programme supports 30 children and youths,
and includes both a soccer and a ballet school.

CSR and Business Relations
Companies are increasingly being held jointly responsible for social issues in their value
chains. The competitive standards of our business associates have an impact on our business,
and we should therefore seek to work with them to ensure the highest standards possible.
A shared set of basic values should be a prerequisite to entering joint ventures and partnerships.
Hydro’s reputation may be at stake if we choose associates that do not comply with
basic standards, for example with respect to human rights or corruption. More outsourcing
means that Hydro’s reputation is increasingly dependent on the behaviour of its suppliers.
Suggested approach
1. When Hydro has a controlling interest:
The Hydro CSR principles apply without
limitations.
2. When Hydro has a minority interest:
Procedures should be established to
identify and minimize discrepancies in
CSR standards and practices.
3. Associates:
Partners, agents, representatives, consultants
and other associates shall be made aware of
our principles and be requested to apply
them.
4. Suppliers:
To improve supplier and contractor standards,
procedures for pre-qualification, evaluation,
selection and monitoring of suppliers shall
be established. There are several checklists
in our business planning systems for this
purpose.
5. Development of suppliers:
Develop rather than exclude suppliers
by putting emphasis on competence,
capacity, technology transfer and standards
in situations where there are no suppliers
with high standards.
■ Select business partners with the
highest possible standards
■ Promote values:
Hydro’s CSR principles shall be
promoted vis-à-vis partly owned
companies and other business relations.
■ Reduce losses:
Not checking associates’ standards
properly can lead to losses due to
changing suppliers at a later date.
■ Ensure market position:
Hydro risks losing market shares, as
customers may react to the standards
of the associates or suppliers we deal
with. The same may apply to shareholders.
■ Be thorough:
Fundamental differences in values surface
only in acute and specific situations. Be
sure to make a thorough enough analysis
of business partners’ standards; check
with previous partners, ask for an analysis
from independent sources, etc.
43

Dilemmas:
Hydro has an opportunity to acquire part of an
attractive licence for oil production in a developing
country. The potential partner, who wants
access to Hydro’s deep sea experience, is not
very well known to us, and we do not know
much about its values and business practice.
A decision must be taken quickly, so
it is difficult to make a proper due diligence
assessment of the partner through independent
sources. How far can we trust the partner’s own
assurances? How far can we go in asking about
ethical issues, without giving him the impression
that we do not trust him and risk a negative
cooperative climate? Shall we just join forces
to seize a major business opportunity?
Examples:
Sourcing:
Hydro Aluminium includes social criteria
in assessing alumina suppliers.
Projects:
Hydro Technology and Projects has
a rigorous supplier qualification and monitoring
process that covers HSE and CSR issues.
In a very important phase of a construction
project, the supplier of a critical item suddenly
proves to be unable to deliver in time. However,
you are approached by another supplier who
has this item available. You do not know much
about this supplier, who has a reputation for
good products, but his ethical standards may
not be the best. Taking the time to check further
or find an alternative supplier will result in the
project getting behind schedule and exceeding
budget (and be bad for your KPIs).
What do you do? How far should Hydro
go to assure compatible standards in suppliers?
Exclusion:
Suppliers that do not meet CSR standards may
be excluded. The supply ship Prestige, for example,
was disqualified because of unacceptable
safety standards and working conditions.
45

46
CSR in Strategy,
Business Planning and Reporting
To integrate CSR in the annual business planning process,
the following steps should be taken:
1.
Social
Responsibility
Directive and
Code of
Conduct
6.
Report
Risks,
opportunities,
status targets
2.
Risks &
opportunities
Issue
identification
3.
Status &
performance
Site managers
5.
Follow-up
& monitor
4.
Targets &
action plan
Site managers
and stakeholders

CSR shall be integrated in all strategy development,
business planning and reporting.
The principles of Hydro’s Social Responsibility
directive should be known throughout the organization.
Line managers are responsible for CSR
implementation and for communicating the basic
principles to all employees. When necessary, the
principles and the intention of the directive
should be translated into the local language.
Risks and opportunities in relation to CSR
should be identified. We have highlighted a
wide range of both risks and opportunities in
the preceding chapters. These will vary greatly
in different countries and according to the type
of activities. To identify the issues relevant to
a specific operation, try to think how negative
impact on the surroundings could be minimized,
and how the operation could improve social
standards and strengthen Hydro’s competitive
advantage. Then set targets and draw up
action plans. These should aim to minimize
risks and maximize opportunities, and should
include monitoring and follow-up.
Hydro aims to ensure transparency in all our
activities. As a tool to achieve this, we report on
the financial, environmental and societal aspects
47
of our business. Social reporting is thus an integral
part of sustainability reporting, and it has traditionally
been conducted in the Annual Report.
More extensive reporting procedures on social
issues are emerging; and implementing this is a
continuous process.
CSR questions are also included in internal
audits.
Social reporting shall reflect Hydro’s positive
and negative impact on society, and the effect of
issues on our operations. Social reporting should
provide a basis for future assessments of risk,
improvement tracking, and decision making, and
thus help us to manage operations in a better
way. Systematic social reporting accommodates
the requirements of emerging legislation, pressure
groups and rating agencies. Reporting on
risks and opportunities, targets and plans shall
be carried out through the regular reporting line.

48
Resources
The Hydro Social Responsibility Intranet,
http://intra.csr.hydro.com, contains
supplementary information, updated
news, and a listing of contact persons
in the CSR Department.
Our first publication on general CSR
issues, Invitation to a Dialogue, can be found
as a pdf-file on our intranet, or can be ordered
in print by contacting the CSR Department.
Contact the CSR Department on
csr@hydro.com.
Corporate Directives
Hydro’s Peoples Policy – NHC-CD03
Hydro’s Health, Safety, Security and
Environment Policy – NHC-CD04
Hydro’s Code of Conduct – NHC-CD05
Hydro’s Social Responsibility NHC-CD12
Updated versions of all Corporate Directives
are available at the corporate portal:
http://intra.corporate.hydro.com
and at www.hydro.com.
General CSR information sources:
Books and Articles:
Grayson, David and Hodges, Adrian:
“Everybody’s Business. Managing risks and
opportunities in today’s global society,”
DK Ltd., London (2001)
Porter, Michael: “The Competitive Advantage of
Corporate Philanthropy”. Harvard Business
Review, December 2002.
Post, James E., Lawrence, Anne T. and Weber,
James: “Business and Society. Corporate
Strategy, Public Policy, Ethics”, McGraw-Hill,
New York (2002)
Zadek, Simon: “The Civil Corporation: The New
Economy of Corporate Citizenship”, Earthscan
Publications, London (2001).

Web sources:
Country information:
CIA World Fact Book:
www.cia.gov/cia/publications/factbook
US Energy Information Administration,
Country Analysis Briefs:
www.eia.doe.gov/emeu/cabs/contents.html
Menas Associates: www.menas.co.uk
Amnesty International country overview:
http://web.amnesty.org/library/engworld/2am
Economist Intelligence Unit: www.viewswire.com
Sources on Corruption and Bribery
Transparency International: www.transparency.org
Transparency International Norway:
www.transparency.no
The Global Corruption Report:
www.globalcorruptionreport.org
Internal Audit complaints and concerns channel:
http://intra.hydro.com
Documents (available at intra.csr.hydro.com):
The OECD Convention on Combating
Bribery of Foreign Public Officials
The Business Principles for Countering Bribery
The United Nations Convention against
Corruption
Sources on Labour
practices and Human Rights
Amnesty International: www.amnesty.org
Amnesty International Norway: www.amnesty.no
Amnesty International UK Business Group:
www.amnesty.org.uk/business
The UN Global Compact:
www.unglobalcompact.org
Global Witness: www.globalwitness.org
Human Rights Watch: www.hrw.org
Business and human rights resource centre:
www.business-humanrights.org/Home
The International Labour Organisation:
www.ilo.org
Documents (available at intra.csr.hydro.com):
The Universal Declaration of Human Rights
The Voluntary Principles on Security and
Human Rights
The ILO Declaration
Networks and Organisations
CSR Europe: www.crseurope.org
World Business Council for Sustainable
Development: www.wbcsd.ch
Business Partners for Development:
www.bpdweb.org
United Nations Global Compact:
www.unglobalcompact.org
The Global Mining Initiative:
www.globalmining.com
International Association of Oil and Gas
Producers: www.ogp.org.uk
International Petroleum Industry Environmental
Conservation Association: www.ipieca.org
Confederation of Norwegian Business and
Industry (NHO): www.nho.no
Norwatch: www.fivh.no/norwatch
International Alert: www.international-alert.org
Indexes
Dow Jones Sustainability Group Index:
www.sustainability-index.com
FTSE4 Good Index: www.ftse.com/ftse4good
49

50
Appendix 1
Hydro’s Social Responsibility Directive NHC CD12
Revision date: 2003-07-15
1 Purpose
Norsk Hydro is committed to sustainable value-creation
for our shareholders, other stakeholders, and
the communities where we operate. As an international
industrial and natural resources company, our
operations impact the lives of a large number of
people around the world. We pursue opportunities
while managing risks taking the social impact of our
business operations into consideration. This is what
is commonly called Corporate Social Responsibility.
This document contains the basic principles
that we will follow in order to live up to our corporate
social responsibilities. It provides a framework to
help put these principles into practice, and allocates
responsibility for their implementation.
2 Our Basic CSR Principles
2.1 Respect for Human Rights
Hydro supports the principles set forth in the
Universal Declaration of Human Rights. We shall
make sure that our operations are conducted in
accordance with basic human rights standards.
2.2 Contributing to Sustainability
Through developing profitable business and active
engagement with local communities, we aim to
ensure that our business practices contribute to
long-term economic and social development. We
will work with government and civil society to define
roles and responsibilities for social development.
2.3 Diversity
Hydro will not discriminate on the basis of gender,
religion, race, national or ethnic origin, cultural background,
social group, disability, sexual orientation,
marital status, age or political opinion. We recognise
the intrinsic value of the different cultures in which
we operate, and will show respect for these cultures
in all our business practices.
Hydro will pay special attention to the rights,
requirements and cultural integrity of indigenous
people affected by our operations.
2.4 Dialogue
To ensure that our activities are properly adapted to
meet local conditions and generate positive benefits
both for the Company and the community, we
are prepared to enter into an open dialogue with
relevant stakeholders.
We shall give attention to initiatives and input
which serve to improve our social responsibility
standards and practices.
2.5 Integrity
Hydro shall maintain high standards of integrity.
This means that we shall be honest and fair in
all our dealings.
We shall not permit or tolerate engagement
in bribery or other forms of corruption.
3 From Principles to Practice
3.1 Reporting
Each unit shall report on important aspects of
the social impact of their business in accordance
with guidelines established by the Corporate CSR
staff.
3.2 Insight and Knowledge
Good CSR management requires knowledge and
understanding of societies and communities where
we operate. Knowledge and understanding may
be acquired from within the organisation or from
external sources such as consultants, authorities
or non-governmental organisations.
Social knowledge shall be made available to
relevant staff. Training in cross-cultural understanding
shall be provided when appropriate.
3.3 Anticipating Issues
To ensure that we act in accordance with our CSR
principles and manage opportunities and risks, our
businesses shall seek to anticipate critical social
issues. Key stakeholders shall be identified and,
when appropriate, be consulted before any major
commitments are made or significant resources
are allocated.

3.4 Social Impact Assessment
To ensure the best possible management of
long-term social consequences related to significant
changes in an ongoing operation or when new
projects are launched, the unit in charge should
evaluate whether and to which extent social impact
assessments should be conducted as a basis for
making business decisions.
3.5 Community Investments
Based on systematic impact assessments and
corporate strategies, Hydro's businesses may
engage selectively in social investments that
contribute to healthy community development.
Opportunities for implementation through
partnerships with government and civil society
organisations should be actively explored.
3.6 Partly owned companies and other business
relationships
Hydro's CSR principles shall be promoted vis á
vis partly owned companies and other business
relationships.
To contribute to improving supplier standards,
adequate procedures for monitoring, evaluation
and/or selection of suppliers reflecting Hydro's
social responsibility principles shall be developed.
4 Roles and responsibilities
While each Hydro employee has a responsibility to
abide by the fundamental principles outlined in this
document, specific responsibility for implementation
is assigned as follows:
4.1 Line Management
Line managers are responsible for CSR implementation
and for communicating the basic principles
of this Corporate Directive to all employees in their
organisation.
4.2 Business Units
To ensure that our business practices are in
accordance with these basic principles, each
51
Business Unit shall integrate relevant CSR issues
into its strategy development. Challenges related
to CSR shall be evaluated in connection with the
yearly business planning process. If relevant, goals
and targets should be established.
Operational guidelines for CSR shall be
developed when appropriate and according to
the specific challenges and characteristics of each
Business Unit. Each Business Unit is responsible for
developing and maintaining adequate organisational
capabilities to ensure compliance with this
Corporate Directive.
4.3 Corporate CSR Staff
Corporate CSR is responsible for developing
CSR policy and reporting guidelines, monitoring
internal performance, and for providing general
support to the Business Units. Corporate CSR
is also responsible for coordinating external
reporting at a corporate level and for developing
and maintaining relationships with other companies,
institutions and organisations in order to share
knowledge and competence.
5 No rights created
This Corporate Directive is a statement of certain
fundamental principles, policies and procedures
that govern the Company. It does not create
any rights in any customer, supplier, competitor,
shareholder or any other person or entity.
* Hydro's 12 Corporate Directives should
be seen as a whole and several issues covered
in this document and should be seen in context
with the other corporate directives. Requirements
in NHC-CD03, Hydro's People Policy, NHC-CD04,
Health, Security, Safety and Environment Policy
and NHC-CD05, Hydro Code of Conduct, are
also of relevance to people interested in CSR.

52
Appendix 2
Hydro's Code of Conduct NHC CD05
Revision date: 2003-07-15
1 General
The Hydro culture is rooted in the principles of
honesty and respect for other people. Successful
businesses are profoundly dependent on confidence
and a good reputation. Hydro's diversified operations
demand a high degree of care, honesty and integrity.
Accordingly, Hydro values its company culture and
reputation as key assets. We expect our employees
to promote our core values by acting responsibly
towards colleagues, business associates and
society at large.
The main purpose of Hydro’s Code of Conduct
is to ensure that all persons acting on behalf of
Hydro perform their activities in an ethical way and
in accordance with the standards Hydro sets
through its Steering Documents. The rules will
help secure compliance with laws and regulations.
Legislation with particular relevance to this directive
includes domestic legislation based on the OECD
convention on briberies and US legislation on
fraudulent financial reporting.
This Code of Conduct provides a framework
for what Hydro considers responsible conduct, but
is not exhaustive. As a Hydro employee, you should
always strive to exercise good judgement, care and
consideration in your service for the Company.
Reference in this Code of Conduct to Hydro or
the Company should be understood as Norsk
Hydro ASA, its affiliates and subsidiaries.
2 Scope and responsibility
The Code of Conduct applies to all employees –
including temporary personnel – of the Company
throughout the world as well as to the members of
the Board of Directors of Norsk Hydro ASA and of
its subsidiaries (Board Members).
You shall avoid acting or encouraging others
to act contrary to this Code of Conduct, even if such
deviations under the circumstances may appear to
be in the Company's interest. If you are uncertain
whether a particular activity is legally or ethically
acceptable, you should, as far as practicable,
consult in advance with your immediate superior
or the Corporate Legal Office.
As a line manager, you are responsible for
making these guidelines known and to promote
and monitor compliance.
Violation of this Code of Conduct will not be
tolerated and may in accordance with relevant legislation
lead to internal disciplinary actions, dismissal
or even criminal prosecution.
Should an improper practice or irregularity occur
within the Company, the Company is committed to
make necessary corrections and take remedial action
to prevent recurrence.
This document has been approved by the
Board of Directors of Norsk Hydro ASA. Deviation
handling according to NHC-CD02 Hydro’s Management
Model, if any, will be handled by the CEO.
3 Complaints, expression
of concern and non-punishment
Hydro wishes to stimulate actively open discussions
about responsible conduct in an improvement
oriented and unbureaucratic way. Thus, you should
normally discuss your concerns and complaints with
your superior. If you deem this not to be appropriate,
you may address any other of your superiors, the
local Human Resources or HSE staffs, your local
compliance officer where such exists, or the Head of
Internal Audit Corporate. Such concerns or complaints
may be reported confidentially, in your preferred language
and – if you find it necessary – anonymously.
As a matter of law, concerns regarding
questionable accounting or auditing matters
shall be submitted to the Head of Internal Audit
Corporate, which serves as secretary to the Audit
Committee of the Board of Directors, or to the
chairperson of the Committee.
If you in good faith express your concern to
a relevant body within Hydro concerning possible
violation of law or Company policy, you shall be
protected against any sanctions from Hydro or
any Hydro representative due to your report.
It is a violation of this Code of Conduct to
discriminate or harass anyone for making such
report. Anyone submitting a false report with the
obvious intention to harass may, however, be
subject to disciplinary action.
If you feel that your pointing out any violation

of this policy is in any manner used against you, you
should contact your superior or the Head of Internal
Audit Corporate.
4 Personal conduct
4.1 Behaviour based on mutual respect
As a Hydro employee or Board Member, you are
expected to conduct business and generally behave
impeccably towards business associates, colleagues,
and others. This includes being sensitive to
and respecting foreign cultures and customs.
Hydro does not accept any form of harassment,
discrimination or other behaviour that colleagues or
business associates may regard as threatening or
degrading.
4.2 Intoxicants
Hydro is a drug-free workplace. Accordingly, you
may not be under the influence of intoxicating substances,
including alcohol, while at work for Hydro.
Limited amounts of alcohol may, however, be
served when the local custom and occasion makes
it appropriate to do so, and provided that the
consumption will not be combined with operating
machinery, driving or any other operation that is
incompatible with the use of alcohol.
You shall refrain from using, or encouraging
others to use, intoxicants in a manner that can place
the user, Hydro or any of its business associates in
an unfavourable light.
5 Equal opportunities
Hydro is committed to an inclusive work culture
and appreciates and recognises that all people are
unique and valuable, and should be respected for
their individual abilities. Hydro does not accept any
form of harassment or discrimination on the basis
of gender, religion, race, national or ethnic origin,
cultural background, social group, disability, sexual
orientation, marital status, age or political opinion.
Hydro shall provide equal employment opportunity
and treat all employees fairly. Hydro employees
and business units shall only use merit, qualifications
and other professional criteria as basis for employee-
related decisions in Hydro, regarding for instance
recruitment, training, compensation and promotion.
They shall also show commitment developing
programmes and actions to encourage a diverse
organisation based on the principle of equal
opportunity.
6 Conflict of interest and integrity
53
6.1 Fraud and conflict of interest
Hydro’s employees and Board Members shall not
seek to obtain advantages for themselves (or related
persons) that are improper or in any other way may
harm Hydro’s interests, whether or not this constitutes
criminal fraud.
You may not take part in or seek to influence
any decision under circumstances that can give rise
to an actual or perceived conflict of interest. Such
circumstances may be a personal interest in the
subject matter – economically or otherwise – directly
or through someone closely related.
If you become aware of a potential conflict
of interest you shall, without delay, notify your
immediate superior. Conflicts of interest may not
always be clear-cut, so if you are uncertain, you
should consult one of your superiors or the
Corporate Legal Office.
For particularly sensitive functions or areas
of responsibility, each business unit should evaluate
the need for routines to identify potential conflicts
of interest.
6.2 Bribes, gifts and favours
You shall not, in order to obtain or retain business
or other improper advantage in the conduct of business,
offer, promise or give any undue advantage
to a public official (or a third party) to make the
official act or refrain from acting in relation to the
performance of her/his official duties. This applies
regardless whether the advantage is offered
directly or through an intermediary.
Gifts or other favours to business associates
shall comply with locally accepted good business
practice. Gifts and other favours can only be given
or granted provided that they are modest, both with

54
Appendix 2
Hydro's Code of Conduct NHC CD05
Revision date: 2003-07-15
respect to value and frequency, and provided the
time and place are appropriate.
As a Hydro employee or Board Member, you
are not permitted to accept from business associates
monetary or other favours that may affect or
appear to affect your integrity or independence.
Gifts and other favours can only be accepted to the
extent they are modest, both with respect to value
and frequency, and provided the time and place
are appropriate.
If you are offered or have received such
favours beyond common courtesy gifts you shall,
without delay, notify your immediate superior or the
Corporate Legal Office, that will determine whether
your integrity or independence may be perceived
to be affected.
6.3 Political contributions
Neither Hydro nor any Hydro employee or Board
Member shall make financial contributions to political
parties on behalf of the Company. This does not
preclude Hydro from supporting political views in
the interest of the Company.
6.4 Financial interests in other businesses
As a Hydro employee or Board Member, you
should avoid having a personal ownership interest
– directly or indirectly – in any other enterprise if it
compromises or appears to compromise your
loyalty to the Company. Before making an
investment in a company that competes with
the Company or does business with the Company
(such as a supplier), other than acquiring less than
one percent (1%) of a listed company, your immediate
superior shall be consulted. Special attention
should in all circumstances be given to potential
conflicts of interest as described in section 6.1.
6.5 Activities with a competitor,
supplier or other business associates
Before engaging in any activity that may be perceived
to advance the interests of a competitor or a supplier
(or other business associates) at the expense of
Hydro’s interests, including serving on the board of
such company, you shall consult with your immediate
superior. You may not market products or services
in competition with Hydro’s business activities.
6.6 Confidential information
Information, intellectual property and innovative
ideas are valuable Hydro assets. These intangible
assets must be appropriately managed and
protected. Hydro’s general policy of openness
and transparency shall not prevent appropriate
protection of information that may be of value
to Hydro’s business interests.
Information other than general business
knowledge and work experience that becomes
known to you in connection with performance of
your work, shall be regarded as confidential and
treated as such. Of particular relevance are the
rules against utilising confidential information for
personal gain for yourself or others.
6.7 Safeguarding assets and records
Safeguarding assets and records of Hydro, customers
and other business associates is the responsibility
of all Hydro employees and other Company
representatives. All such assets shall be used and
maintained with care and respect while guarding
against waste and abuse. The use of Company
time, materials, financial assets or facilities for purposes
not directly related to Company business is prohibited
without authorisation from a relevant Hydro
representative. The same applies to the removal or
borrowing of Company assets without permission.
7 Compliance
7.1 Compliance with laws – general
You shall comply with all applicable laws and regulations
when conducting business on behalf of the Company.
You shall not assist in breach of laws by business
associates, whether it constitutes an illegal act
for the Company or yourself as an individual, or not.
7.2 Antitrust and competition
You shall comply with the antitrust and competition
laws applicable. You should seek advice from the
Corporate Legal Office in all matters involving risk

of antitrust exposure for Hydro, yourself or any of
your reports. See Hydro’s Competition Compliance
Manual.
7.3 Insider trading
You shall abstain from trading or giving advise
concerning trade in the securities of Hydro and
other listed companies on the basis of non-public
information learned through your work for Hydro
which, if publicly known, may influence the price
of the securities.
Hydro has issued regulations for the Company’s
primary insiders as well as guidelines for all employees
wishing to trade in Hydro or other securities -
Trading of Hydro shares.
7.4 Maintaining records
Hydro is committed to transparency and accuracy
in all the Company’s dealings, while respecting
confidentiality obligations etc. As a Hydro employee,
you have the responsibility to maintain necessary
records of the Company’s business and business
relations. No false, misleading or artificial entries
may be made on Hydro’s books and records.
All transactions must be fully and completely
documented and recorded in Hydro’s accounting
records in accordance with section 7.5 below.
7.5 Accurate period reports and
other public financial communication
As a matter of applicable securities laws and stock
exchange listing standards, Hydro is obligated to
provide full, fair, accurate and understandable disclosure
in its periodic financial reports, other documents
filed with applicable regulatory authorities and agencies
as well as in its other public communications.
Employees, particularly our senior executives and
financial officers, are expected to exercise the
highest standard of care in preparing such materials,
paying particular attention to the following;
* Compliance with generally accepted accounting
principles and Hydro’s system of internal
accounting controls is required at all times.
* All Hydro accounting records must be kept and
presented in accordance with the laws of each
55
applicable jurisdiction. They shall not contain
any false or intentionally misleading entries.
Moreover, they must fairly and accurately reflect
in reasonable detail Hydro’s assets, liabilities,
revenues and expenses as well as all transactions
or related occurrences which shall be fully
and completely documented.
* No transaction may be intentionally misclassified
as to accounts, departments or accounting periods,
and unrecorded or “off the books” assets
and liabilities should not be maintained unless
permitted by applicable law or regulation.
* No information may be concealed from the
internal auditors or the independent auditors.
8 Responding to inquiries
from the press and others
Hydro’s profile in domestic and international markets
is greatly influenced by our ability to communicate
consistently and professionally with external parties,
including the media. Consequently, Hydro shall
maintain a principle of openness and be honest and
responsive when dealing with interested parties
outside Hydro as well as society at large.
In order to ensure a co-ordinated interface
with external parties, general inquiries about the
Company or its employees as well as all inquiries
from media, should be directed to the relevant
business unit communications department or
officer or, alternatively, to Corporate Communication.
Inquiries from financial analysts or investors should
be passed onto Corporate Investor Relations.
Inquiries from external attorneys should be passed
on to the Corporate Legal Office or local Hydro legal
staff. Other employees and Board Members needing
to make public statements shall co-ordinate in an
appropriate way as stated above.
9 No rights created
This Code of Conduct is a statement of certain
fundamental Hydro principles, policies and
procedures that govern the Company’s employees
and Board Members. It does not create any rights
for any customer, supplier, competitor, shareholder
or any other person or entity.