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Unmatched supply chain sustainability and social responsibility

The nature of our business impacts the environment and communities surrounding our operations. We mitigate impacts to the extent practicable through state-of-the-art control and remediation measures. We develop infrastructure, support health, safety and education efforts, and provide local employment and business development opportunities. The products we produce are critical for sustainability and higher standards of living. To supply essential natural resources to current and future generations, we are guided by our stated business objectives, principles and policies, and we continuously improve our sustainable development programs. Our approach has three core elements:

Principles of Business Conduct Our approach is based on the overarching values detailed in our Principles of Business Conduct, which set forth the global system of principles that our workforce must follow in all activities – from complying with laws and avoiding conflicts of interest to developing positive relationships in local communities. In 2014, we plan to update our Principles of Business Conduct to emphasize our core values, clearly communicate our expectations and reflect our business objectives in today’s operating environment. We also have developed a Supplier Code of Conduct, to be released in 2014, to ensure that the same values and expectations are clearly communicated to our supply chain partners.

Our supporting policies, along with external standards and initiatives, form the overall framework that guides our sustainability programs. Supporting this framework are internal governance and management systems that provide the essential details on how we operate.

Corporate Responsibility Committee The Corporate Responsibility Committee of our Board of Directors is responsible for overseeing our policies and programs related to the environment, human rights, safety and health, governmental and stakeholder relations, community health and social investments. The Committee examines key performance data and receives briefings concerning challenges and emerging issues in these areas. During 2013, the Corporate Responsibility Committee received various reports and considered numerous items with a particular focus on safety, which included reviewing the root causes of fatal accidents, the corrective actions implemented to prevent accidents in the future, enhancements to our fatality prevention program, our safety accountability practices and our aviation safety activities. In addition, during the year, the Corporate Responsibility Committee reviewed our HIV/AIDS prevention program in Indonesia, malaria prevention program in the DRC, global social programs and expenditures, and political activity and spending practices. The Corporate Responsibility Committee reports to our Board of Directors, which provides oversight on all matters, including the economic viability of our Company – the first element of our approach to sustainable development.

Sustainable Development Leadership Team The Freeport-McMoRan Sustainable Development Leadership Team provides strategic and operational guidance regarding our sustainability commitments. The team is sponsored by our Executive Vice President and Chief Administrative Officer, and is led by our Vice President of Environmental Services and Sustainable Development. The team includes business unit presidents and senior personnel from the safety, supply chain, human resources, sales, compliance, and land and water functions.

During 2013, the team reviewed and addressed key issues and projects including:

  • Our corporate-level Human Rights Impact Assessment and overall process for integration of the UN Guiding
    Principles for Business and Human Rights into our programs
  • Development of a Supplier Code of Conduct that specifies our expectations of suppliers with
    respect to sustainability areas such as anti-corruption, human rights, social and environmental performance
  • Development of Freeport Compliance eXchange, a survey-based online due-diligence software
    designed to assess the risk level of suppliers based on criteria related to anti-corruption and human rights. The tool provides important data that will enable us to help ensure our suppliers demonstrate ethical business conduct.
  • Organizational response to current and emerging requirements, initiatives and value chain inquiries associated with material and product stewardship
  • Monitoring of emerging sustainability reporting initiatives including the GRI G4 Guidelines
  • Review of stakeholder engagement strategies and outcomes, including the socially responsible investment (SRI) community, banking institutions and nongovernmental organizations (NGOs)
  • Our global social investment programs, including our new Foundation in Chile
  • Progress of sustainability performance targets
  • Implementation of the ICMM Sustainable Development Framework, including observations and recommendations from our site-level assurance program

Audits/Independent Assessments Project planning and project life-cycles can span decades. We consider early and effective engagement with stakeholders critical for creating mutual opportunities and reducing sustainability-risks to our plans. We seek strategic partnerships with host governments, communities and development partners to ensure the viability of our projects while delivering meaningful benefits. We aim to work with persons and entities that have pragmatic ideas to help us improve our performance, as well as with those who genuinely seek to understand the overall economic, social and environmental impact of our operations.

Our mining operations maintain 5-year community engagement and development plans that identify affected or interested parties and appropriate methods for ongoing engagement. Local strategies for stakeholder engagement are aligned with business-related risks and opportunities identified in each operation’s Sustainable Development Risk Register. We engage with hundreds of entities via community foundations, formal grievance systems, individual meetings and operations tours, workshops, participatory group panels or focus groups, town hall meetings and surveys. We also engage at the earliest stages through regulatory consultation processes with local governments and community groups, including indigenous peoples, as part of brownfield expansion plans for our copper business.

Our corporate Sustainable Development Department and senior personnel regularly work with the SRI community and NGOs through in-person meetings and site visits, teleconferences, inquiries via email and conferences. In 2013, our corporate team engaged with over 40 investor organizations, sustainability analysts, banks, government entities and NGOs regarding our sustainability programs and performance. Key topics of interest included safety and occupational health, controlled riverine tailings management at PTFI, human rights, security and community engagement programs. As an example, during September and October of 2013, we held stakeholder roundtable meetings in New York and London to review the methodology, process and initial outputs of our corporate-level Human Rights Impact Assessment. More than 30 participants from over 20 entities, including academia, NGOs, business partners and the investment community, participated and provided meaningful input with respect to our human rights programs.

Audits/Independent Assessments To ensure our policy commitments and objectives are being met, we implement a combination of audit and assessment programs along with an annual program for site-level assurance of the ICMM Sustainable Development Framework. Every major operation undergoes a comprehensive internal audit (including contractors) of environmental and health and safety systems at least once every two years. Our operations also are routinely inspected by regulatory agencies or ministries of host governments. The health and safety management systems and environmental management systems of our operations obtain independent certification to Occupational Health and Safety Assessment Series (OHSAS) 18001 and International Organization for Standardization (ISO) 14001, respectively. These systems include corrective and preventive action tracking for internal and external audit findings. In addition, customers or financial institutions may request to conduct sustainability focused audits or assessments at certain facilities depending on geographic location and life-cycle stage.

Project Development Checklist for Sustainable Development Our Project Development Sustainability Review process allows us to integrate sustainability considerations into mine development or expansion projects. The process is designed to help multidisciplined project teams identify risks, unintended consequences, trade-offs and opportunities so they may be adequately addressed early and throughout each stage of project development. Project Development Sustainability Reviews occur at the scoping, prefeasibility, feasibility and/or engineering/construction stages of projects, and the process also is applicable to exploration projects. This review process complements our operational Sustainable Development Risk Register procedure for existing operations.

Since inception, we have implemented reviews for 13 projects, including three during 2013. Key areas of focus identified at scoping stages include access to water, energy and materials, potential impacts to hydrology, air quality, human rights, community receptivity to the project, economic impacts, and land acquisition and resettlement. As we respond to increased demand for our products, our ability to reduce or mitigate certain impacts such as land disturbance, absolute greenhouse gas emissions and water consumption will be challenged even as we continue to integrate sustainability considerations in the early phases of our projects.

Sustainable Development Risk Register The Freeport-McMoRan Sustainable Development framework is designed for alignment with the ICMM Sustainable Development Framework and implemented based on site-specific factors and influences over the short to long term. Our framework has evolved over the past five years and operations vary in maturity of its implementation. Essential to our framework is the Sustainable Development Risk Register process, which prioritizes environmental, social and economic challenges and opportunities based on our views of potential impacts to our business and the importance of these topics to stakeholders. As part of this process, local management teams utilize a matrix with eight consequence categories, including safety, community, environmental, reputational and production impacts.

Our Sustainable Development Department works with operational management teams to review operational risks to ensure the process is effective in articulating and prioritizing key business risks and associated action and monitoring plan elements. For example, during 2013 and into 2014, corporate personnel facilitated training with PTFI leadership not only to assist in focusing the operation’s sustainable development risk register on the most significant challenges, but to identify, resource and track key actions towards desired outcomes. As a result, PTFI is developing an operational-level Sustainable Development Risk Register standard operating procedure (SOP), which exceeds the requirements of the corporate SOP and incorporates a unique management structure to address a large, geographically complex operation.

For more information on our sustainable development program, click here.