FCX is committed to the highest level of ethical and legal conduct in all of our business activities. Acting ethically involves more than simply complying with laws and regulations; it involves recognition that our decisions affect others. By keeping this in mind, we aspire to earn the respect, trust and confidence of our stakeholders.
WHY IT MATTERS
Engaging in corruption or bribery is not only illegal but can permanently damage a company’s business relationships and workforce morale. FCX recognizes that any violation of the United States Foreign Corrupt Practices Act (FCPA) or other anti-corruption and anti-bribery laws of the jurisdictions in which we operate could result in significant criminal or civil fines and penalties, litigation, loss of operating licenses or permits, as well as significant reputational damage.
FCX maintains zero tolerance for corruption of any kind, and we expect the same from our employees, contractors and suppliers. We do not obtain a business advantage through bribery, improper payments, kickbacks or any other illegal means. No employee or contractor may offer, pay, solicit or accept bribes in any form.
Our Anti-Corruption Policy and Guidelines require compliance with the FCPA and other applicable laws of the countries and jurisdictions where we operate. In addition to our annual PBC training, we provide annual anti-corruption training for specific groups of employees using a riskbased approach. For example, senior-level employees who may interact with government officials are required to complete the training. The online training course supplements our in-person classroom training programs to extend the reach of our overall compliance efforts.
In recognition of the potential legal and reputational liability that could result from actions of our business partners and contractors under the FCPA and other laws, the company operates an online due diligence platform, the FCX Compliance eXchange (FCeX). FCeX is a survey-based software platform designed to assess risk in the areas of anti-corruption, international trade, human rights and responsible minerals sourcing. FCeX enhances our ability to identify, assess and mitigate compliance risks.
Annually, we perform company-wide program and risk assessments with assistance from our internal audit firm, Deloitte, to assess risk and plan for the following year’s audit strategy. Business controls resulting from periodic fraud risk assessments are tested and reviewed annually at our corporate offices as well as at PT-FI, Cerro Verde, El Abra and Atlantic Copper.
Among other reporting mechanisms, FCX maintains a Compliance Line to provide guidance and assistance to workforce members with any questions or concerns related to our PBC, policies or procedures. To encourage our workforce to report potential violations of business conduct, our Compliance Line enables anonymous reporting. The Compliance Line also is available to suppliers (including contractors) through our Supplier Code of Conduct.
During 2020, we received 270 reports through the Compliance Line relating to various topics, including employee workplace conduct, environment, health and safety, protecting company assets, and conflicts of interest. All reports are investigated and, if substantiated, the appropriate disciplinary action is taken, up to and including termination of employment.
WHY IT MATTERS
Sourcing of goods and services can have significant impact across all areas of ESG risk. In recent years, human rights and environmental risks in supply chains have become a focus in the mining industry. In addition, automotive and electronics original equipment manufacturers have received significant pressure from shareholders and other stakeholders to improve due diligence in their supply chains, which is increasing expectations on minerals producers globally. FCX is committed to sourcing responsibly across our supply chains wherever we do business.
Over 70% of the world’s copper is used in applications that deliver electricity. This makes copper a crucial contributor to the energy transition and a decarbonized world. As the energy transition continues, copper use is expected to increase in electric vehicles and their charging stations as well as renewable energy technologies, such as solar and wind, and the necessary connections for these technologies to grids. We believe increased copper demand should not come at a cost to sustainability. As one of the world’s largest copper producers, we work hard to responsibly deliver copper to our customers and markets around the world. We do this in three key ways: (1) identifying and mitigating risks in our supply chains through our own responsible sourcing efforts, (2) managing the risks of our products and by-products in use by ensuring these risks are well understood and managed, and (3) working to better understand the full life cycle impacts of our products along the value chain.
RESPONSIBLE SOURCING OF GOODS & SERVICES
Our Supplier Code of Conduct and compliance screening processes are the foundation of our responsible sourcing program for goods and services. Responsible sourcing of goods and services is led by our Global Supply Chain Sustainability Manager under the oversight of the SLT with support from the Human Rights Working Group. This work is a significant task, as it equates to over 20,000 suppliers that provide a wide variety of goods and services – from small catering businesses in remote locations to large multinationals that produce heavy machinery. In 2020, we began implementation of an advanced risk and data-based responsible sourcing framework using a combination of tools in the contracting and supplier qualification process. The system enables both screening and advanced risk assessment, tracks supplier progress against any required action plans, and enables more direct collaboration with our suppliers throughout the contract life cycle.
In 2020, we also prioritized increasing transparency in our local procurement spending to enhance visibility and to encourage increasing opportunities for local suppliers where feasible. For example, we joined WEConnect International, a global network that connects women-owned businesses to qualified buyers around the world, working to enable them to compete in the global marketplace.
Our global supply chain team also worked with local suppliers when cleaning supplies and Personal Protective Equipment (PPE) became scarce during the onset of COVID-19. In Colorado, a collaboration with local sustainable distilleries produced a reliable and sustainable source of generic wipes and cleaning solutions. In Arizona, local hardware stores provided PPE such as face coverings. These examples demonstrate our commitment to support our local communities and the critical role they play in daily operations.
RESPONSIBLE SOURCING OF MINERALS & METALS
In 2019, we adopted and published our Responsible Sourcing of Minerals Policy, which commits the business to identifying and mitigating human rights violations in our supply chains of minerals and metals used in our downstream processing facilities. The Policy describes how we implement the OECD Guidelines on Mineral Supply Chains in Conflict-Affected and High-Risk Areas in our supply chain of minerals and metals. It is critical to address the requirements of the new London Metals Exchange Policy on Responsible Sourcing, where we trade several of our products. It is also a requirement of both the ICMM Mining Principles and the Copper Mark. We previously implemented a similar policy at our Kokkola cobalt refinery in Finland. In 2019 and 2020, we implemented the new policy across our copper business and smelter operations. We are working to implement it across our molybdenum operations in 2021.
To do this, we assess our incoming metal and mineral supply chains to identify potential “flags” with regard to what are defined as Annex II risks – such as bribery and corruption, human trafficking, and child or forced labor – by the OECD Guidelines. We then go through a risk-based due diligence process to help us better understand these “flags.” These results then are reviewed by the applicable internal committee and appropriate actions are taken. Actions can include working together with the supplier to identify and implement an action plan, termination or general collaboration to build capacity. In 2020, we conducted due diligence on several mineral suppliers. We also began collaborating with our key traders to improve risk identification and systems. We are one of the first base metals producers to publish an OECD Step 5 report for copper and molybdenum, providing a summary of our efforts in 2019 and early 2020, and we believe this level of transparency is critical for our industry partners to adopt.
In 2020, FCX played an important role in the development of a Base Metals Due Diligence Standard managed by the Copper Mark. The standard provides specific steps for base metal producers of copper, nickel, zinc, lead and cobalt to meet the OECD Guidelines and to aid in conformance with the LME’s forthcoming responsible sourcing commitments. The standard was published in February 2021 by the Copper Mark and its partners.
UNDERSTANDING OUR PRODUCT FOOTPRINT
Life Cycle Assessments (LCAs) provide an overview of environmental impacts across a product’s life cycle to enable decision makers to identify improvement opportunities and trade-offs. Globally, governments increasingly are using LCAs in Circular Economy frameworks and for carbon and water footprint comparisons of products and services. In early 2020, the International Copper Association (ICA) launched a project to update the current global LCA profile for copper concentrate and cathode. FCX plays a key role in this study, providing data from our mining and refining facilities. However, the project was temporarily suspended in 2020 to enable producers to focus on COVID-19 adaptation. The project was relaunched in early 2021 and its focus expanded to include developing a methodology for the carbon footprint of copper. In addition, a project was re-initiated by the Copper Development Association (partner organization to ICA in North America) to conduct an LCA of copper rod used for electrical applications. FCX will participate in both studies in 2021 and use the results to drive internal improvements (e.g., support climate strategy) and provide data to customers and other value-chain participants.
WHY IT MATTERS
Public policy decisions can significantly affect our operations, future business opportunities, employees, shareholders and the communities where we operate. Trade associations and other organizations provide information and assistance with policy issues of concern to us, and certain partnerships representing our best interests are invaluable to the advancement of the industry.
FCX is committed to the highest level of ethical and legal conduct regarding its political activity and spending practices, and to rigorous compliance with applicable laws and regulations.
We exercise our right and responsibility to participate in public policy matters by following public matters that are important to us and interacting, where appropriate, with elected and appointed government officials, regulators and their staff.
We are a member of various trade associations and other organizations. When we fund a trade association, we do so because we believe the association generally represents the company’s best interests, although importantly, we may not support an association’s position on every issue. For example, we do not delegate our voting power to trade associations or other organizations without completing our own due diligence on matters of importance.
In addition to operating in the United States, we have significant operations in Chile, Indonesia, Peru and Spain. We work cooperatively with local, regional and national governments wherever we have operations. From time to time, issues may arise in these jurisdictions that affect our operations. With agreement from senior management, we may engage in dialogue with government officials on issues that affect our business goals and objectives, and the jobs that are thereby created. We only engage in non-partisan political activity and spending outside of the United States as permitted by, and in strict compliance with, applicable laws and regulations, including the FCPA.
The company’s political activity and spending practices are overseen and approved by senior management. Annually, the Board’s CRC reviews our political activity and spending practices. Our political spending also is subject to legal review and external audit.
Our practice is to make information concerning all political contributions available to our stakeholders annually by posting our political contributions.
WHY IT MATTERS
Our operations contribute significantly to national, regional and local development in jurisdictions where we conduct business through payments to host governments via taxes, royalties and other financial obligations. We believe that increased transparent disclosure of our natural resource revenues and payments to host governments promotes better governance and accountability regarding the distribution of natural resource industry revenues.
FCX’s tax strategy seeks to balance the economic considerations of our host governments and stakeholders with our business objectives. The Board’s Audit Committee provides ultimate oversight of our global tax strategy, and management of our tax strategy is conducted within the corporate finance group under the direction of our President and CFO. Tax risks are identified and monitored by a global team of tax professionals, which assists in executing our tax affairs in line with our strategy, PBC and internal control policies. We are committed to fully cooperating with all tax authorities and providing access to accounting and governance documentation as requested.
We advocate for the development of fair and predictable tax laws in jurisdictions where we conduct business on issues that are important to our business and the industry.
The Extractive Industries Transparency Initiative (EITI) is a global standard to promote transparent and accountable management of natural resources. We have endorsed and committed to support the EITI since 2008. Our support includes direct financial contributions as well as contributions through ICMM. We maintain significant mining operations in Indonesia and Peru, both of which are EITI-implementing countries, and we actively support and participate in associated in-country processes.
In addition to our country-level EITI commitments and regulatory reporting obligations, our practice is to provide transparency by voluntarily reporting cash payments to governments in all jurisdictions where we conduct business, as presented in the table below.