© Hydro 2024
68
General
information
1. Introduction
2. Business
3. Performance
4. Governance
5. Sustainability
6. Financials
7. Appendices
Content
General information
The sustainability statement presents Hydro’s governance and
performance related to material sustainability topics, including
detailed performance indicators (sustainability metrics).
This general information section presents identified material
sustainability related impacts, risks, and opportunities, and Hydro’s
principles for sustainability reporting which form the basis for
preparation of the sustainability statements.
Principles for sustainability reporting
The purpose of Hydro's reporting is to provide stakeholders with a
fair and balanced picture of relevant aspects, engagements,
practices, and results for 2023. The sustainability statement is
prepared on the same consolidated basis as the financial statements.
The basis for preparation of sustainability information that relates to
business relationships in non-consolidated entities, including Hydro’s
upstream or downstream value chain, is clearly identified as such.
The sustainability statement is approved by the Board of Directors.
Statutory reporting and reporting standards
Hydro’s sustainability statement is prepared in compliance with the
Norwegian Accounting Act and other applicable regulations.
Disclosures required by the Norwegian Equality and Anti-
Discrimination Act are included in Own workforce. Disclosures
required by the Australian Modern Slavery Act 2018, the UK Modern
Slavery Act 2015 and the Norwegian Transparency Act 2021 are
provided in the chapters Human Rights, Own Workforce, Workers in
the value chain and Affected communities.
Hydro reports in accordance with the GRI Standards and the
requirements of the International Council on Mining and Metals
(ICMM). Please see the GRI index at Hydro.com/gri.
In 2023, Hydro has changed and restructured its sustainability
disclosures based on the EU Corporate Sustainability Reporting
Directive (CSRD) and the applicable European Sustainability
Reporting Standards (ESRS). See the section on Reporting changes
on this page for an overview of what these changes entail. Hydro will
report in compliance with the implementation schedule of the CSRD
and applicable ESRS in the 2024 annual report.
Reporting scope and disclosures in relation to
specific circumstances
The sustainability statement covers the period January 1 to
December 31, 2023. Operations sold or demerged during the year
are not included, unless specified. Health and safety, and headcount
metrics for previously consolidated operations are included in the
historical data for the period the unit was owned by Hydro. Climate
and environmental metrics for new operations or operations acquired
during the reporting year are included for the year in full as well as in
historical data unless otherwise mentioned. Data from discontinued
or closed down operations are included for the part of the reporting
period it was under operation, unless otherwise stated. Minority
owned operations are not included in the consolidated metrics.
Reporting systems
Metrics for climate change, energy, pollution, water, resource use
and waste, and certain data on biodiversity are collected using
Hydro’s environmental reporting system on an annual basis. Metrics
for health and safety of Hydro’s own workforce are collected using
the reporting systems for incident reporting, IMS and Synergi.
Diversity and other metrics relating to Hydro’s own workforce are
collected from Hydro’s SAP system and Hydro’s employee
engagement survey, Hydro Monitor. Data for workers in the value
chain and affected communities are based on Hydro’s due diligence
processes and data collected from the business areas, procurement
teams, and Group Internal Audit, and Investigations’ overview of
alerts reported to line management, supporting staff functions, and
Hydro’s AlertLine. Data for consumers and end users are based on
customer satisfaction studies, including product quality, on-time
delivery, and concession and claims statistics. Additional metrics are
calculated by corporate functions based on third party data.
Basis for preparation and limitations
The basis for calculation and presentation of sustainability metrics is
described in the notes to the respective metrics, including information
on whether the metrics are measured directly or estimated based on
sources such as third-party data or sector averages. Metrics are
collected from Hydro’s operational units relying on local management
systems and are typically based on process data systems,
measurements, calculations, and purchasing data. Controls are
performed to ensure that the information is complete and accurate.
However, the scope of the sustainability statement and the absence
of generally accepted reporting standards and practices for certain
data may result in uncertainties in the reported information. The
notes to the chapters on each material sustainability topic includes
information on sources of estimation or outcome uncertainty.
Reporting changes and prior reporting errors
Hydro’s sustainability disclosures in the Annual Report 2023 has
been restructured based on the CSRD and ESRS. The changes
include:
• Updated materiality assessment: Hydro’s assessment of
material sustainability topics was updated in 2023 based on the
ESRS. See the Materiality assessment section for more detail.
• Restructuring the sustainability disclosures: Sustainability
disclosures are included in a dedicated sustainability statement
in the annual report. The sustainability statement follows the
structure required by the ESRS.
• Introducing this section on general information, corresponding to
the structure and disclosure requirements in the ESRS 2
standard.
• Reporting on ESRS topical standards: A summary of Hydro’s
assessment of material impacts, risks and opportunities (IRO) in
relation to each ESRS topical standard is included in this
general information section. Details on identified IROs for each
material sustainability topic, including related due diligence and
stakeholder engagement activities, are presented under the
heading “why it matters” in the chapter corresponding to each
material sustainability topic. The chapter on each material
sustainability topic includes a section on “our approach,” which
presents Hydro’s policies, strategy, actions, targets and metrics
in relation to the sustainability topic.
• Including sustainability metrics in the management report:
Material sustainability metrics and indicators that were
presented in the appendix to the 2022 annual report, are now
included in the sustainability statement as part of Hydro’s
management report, which is approved by the Board of
Directors.
• Including a content index with ESRS Disclosure Requirements
alongside our GRI index, available at Hydro.com/gri.
Several minor changes that are not directly related to the ESRS,
have also been made to the sustainability statement. This primarily
comprises increased disclosures and the addition of more
sustainability metrics, including:
• The sustainability chapters corresponding to material
sustainability topics identified in 2022 have been reorganized
© Hydro 2024
170
Consolidated
financial
statements
1. Introduction
2. Business
3. Performance
4. Governance
5. Sustainability
6. Financials
7. Appendices
Content
Section 1 – General information
Note 1.1 Reporting entity, basis of presentation, significant accounting
estimates and judgment
The reporting entity reflected in these financial statements comprises Norsk Hydro ASA and consolidated
subsidiaries (Hydro). Hydro is headquartered in Drammensveien 264, Oslo, Norway, and the group employs
around 33,000 people in about 40 countries. Hydro is a global supplier of aluminium with operations
throughout the industry value chain and engages in development and production of renewable energy.
Operations include power production, bauxite extraction, alumina refining, aluminium smelting, recycling,
and extruded solutions. The Board of Directors and the President and CEO authorized these financial
statements for issue on February 13, 2024. Hydro is listed on the Oslo stock exchange, Oslo Børs.
Basis of presentation
The consolidated financial statements of Norsk Hydro ASA and its subsidiaries are prepared in accordance
with IFRS ® Accounting Standards as adopted by the European Union (EU) and Norwegian authorities,
effective as of December 31, 2023. Hydro also provides the disclosures as specified under the Norwegian
Accounting Act (Regnskapsloven).
The financial statements have been prepared on a historical cost basis except for certain assets, liabilities
and financial instruments, which are measured at fair value. Preparation of financial statements including
note disclosures requires management to make estimates and assumptions that affect amounts reported.
Actual results may differ.
The functional currency of Norsk Hydro ASA is the Norwegian krone (NOK). The Hydro group financial
statements are presented in NOK.
As a result of rounding adjustments, the figures in one or more columns included in the financial statements
may not add up to the total of that column.
Interest rates used for calculating net present values are rounded to the nearest 10 basis points for post-
employment benefits, and to the nearest 25 basis points for other non-financial assets and liabilities.
Significant judgment and estimates
Judgment is applied in assessing how to account for some business transactions and events. The more
judgmental accounting policies include:
• New business models for developing projects or businesses in co-operation with others are applied
for such business activities as renewable energy projects and technology development. Contracts
used in such projects may introduce complexity related to how to assess control and influence for
part-owned companies, including whether Hydro has control, joint control or significant influence over
such companies as further discussed in note 3.1 Investments in joint arrangements and associates.
• Renewable energy projects introduce complex accounting judgment related to contract structures
including which of these contracts that represent financial instruments to be recognized at fair value
and how to measure such contracts with entity specific features as further discussed in note 8.2
Financial instruments.
Estimation risks in determining the amounts to recognize or disclose are associated with different phases
of operation and sources of uncertainty. We have identified the following important sources of estimation
risks, which impacts accounting estimates in different ways:
• Changing business environment, including changes driven by the green shift and physical climate
changes already present or expected in the near future, impacting such estimates as remaining
useful life for existing assets and whether assets are impaired due to shorter useful life, higher cost,
or regulatory constraints of operations. These aspects of estimation are further discussed below and
in note 2.4 Depreciation and amortization expense and note 2.5 Impairment of non-current assets.
• Exiting and remediating sites used for historic activities represent both risks of costs and liabilities,
and opportunity for value creation, and involves estimation of extent and cost of remediation effort as
well as assessment of the value of land, building and other assets historically used for industrial
purposes.
The following areas of accounting involve a significant degree of estimation uncertainty and complexity
and may result in significant variation in amounts. Estimation uncertainty in these areas are partly related
to the sources of uncertainty identified above and partly related to other sources of uncertainty discussed
in the individual notes.
• Impairment of non-current assets, discussed in note 2.5 Impairment of non-current assets
• Uncertain assets and liabilities, discussed in section 4 Uncertain assets and liabilities
• Uncertain tax positions, discussed in note 10.1 Income taxes
• Business combinations and transactions with non-controlling shareholders, impacting such items as
long-lived assets and uncertain assets and liabilities, discussed in note 1.5 Significant subsidiaries
and changes to the consolidated group
• Financial instruments, discussed in section 8 Financial risk and financial instruments
Climate risk and opportunities
Aluminium is widely acknowledged as an enabler for the transition away from fossil fuels and other
activities that generate greenhouse gases, to which companies, states and society at large are committed,
among other through the Paris agreement. However, production of aluminium is resource intensive and
requires significant quantities of energy. The production process itself also results in direct emission of
CO
2
.
Hydro is well positioned to benefit from the transition to net zero GHG emissions. Hydro generates
significantly lower GHG emissions than the industry average, and the average carbon intensity of Hydro’s
aluminium production is below the 2030 and 2035 targets in the 1.5 degree scenario that the International
Aluminium Institute has defined for the aluminium industry. The carbon footprint of aluminium production
is highly dependent on the source of energy used to produce the metal. Hydro’s footprint reflects the fact
that the majority of our primary production facilities use renewable energy.
