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Our Approach

We have a dynamic portfolio of long-lived mining assets and are positioned to respond to society’s demand for copper – a fundamental material used in numerous products relied upon by consumers everywhere, including those around the globe looking to improve their standard of living. As a leading mining company with global operations, we recognize the challenges we face. We also know that we must work hard every day to improve our operations because mines of the future will require innovative technology to lower costs, increased stakeholder engagement combined with private/public partnerships for social investments, and responsiveness to various risks and opportunities that can affect timely resource development.

The principles of Safe Production provide us with a solid foundation upon which to build mines that will be thriving decades from now. We take advantage of economies of scale and capital efficiency while utilizing technologies to drive efficiency improvements. Our mines will continue to be developed through sincere relationships built on trust and hard work for the benefit of all concerned.

To supply essential natural resources to current and future generations, we are guided by our stated business objectives, principles and policies, and we continuously strive to improve our sustainable development programs. Throughout our reporting, we report the daily progress our workforce is making on key issues, including some emerging, which affect our company and our stakeholders.

The nature of our business impacts the environment and communities surrounding our operations. We mitigate impacts to the extent practicable through advanced 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. Our approach has three core elements:
ECONOMIC ENVIRONMENTAL SOCIAL

Leverage our operating and financial expertise, technologies and supply chain to ensure that we remain a vibrant, sustainable business entity.

Evaluate environmental aspects continuously throughout a project’s life cycle to minimize adverse impacts and promote opportunities.

Operate safely, and uphold and respect human rights. Engage openly and transparently with internal and external stakeholders and keep our commitments in order to build trust. This enhances our ability to obtain permits to operate and ensures we have a dedicated workforce.

Principles of Business Conduct The overarching values detailed in our Principles of Business Conduct 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. The Freeport-McMoRan Supplier Code of Conduct sets forth our expectations for our supply chain partners in areas such as safety, anti-corruption, environment and human rights.

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 details on how we operate.

Governance The Freeport-McMoRan Board of Directors (board) as a whole is responsible for risk oversight, with reviews of certain areas being conducted by the relevant board committees that report to the full board. In its risk oversight role, the board reviews, evaluates and discusses with appropriate members of management whether the risk management processes designed and implemented by management are adequate in identifying, assessing, managing and mitigating material risks facing the company. In addition, as reflected in our Principles of Business Conduct, the board seeks to establish a “tone at the top” communicating the board’s strong commitment to ethical behavior and compliance with the law.

The board believes that full and open communication between senior management and the board is essential to effective risk oversight. Our non-executive chairman regularly meets with and discusses with our chief executive officer a variety of matters including business strategies, opportunities, key challenges and risks facing the company, as well as management’s risk mitigation strategies. Senior management attends all regularly scheduled board meetings where they conduct presentations on various strategic matters involving our operations and are available to address any questions or concerns raised by the board on risk management-related or any other matters. The board oversees the strategic direction of the company, and in doing so, considers the potential rewards and risks of our business opportunities and challenges, and monitors the development and management of risks that impact our strategic goals.

Board committees assist the board in fulfilling its oversight responsibilities with respect to certain areas of risk. Each committee regularly reports on these matters to the full board. The Corporate Responsibility Committee of our board is responsible for overseeing our policies and programs related to management of risks associated with the company’s safety and health policies and programs, environmental policy and implementation programs, human rights policy and practices, community health programs and related public health and medical matters, community policy and practices, governmental and stakeholder relations and social investment and sustainable development programs, charitable contributions, and political activity and spending practices. The committee examines key performance data and receives briefings concerning challenges and emerging issues in these areas.

During 2015, 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, corrective actions implemented to prevent accidents in the future, enhancements to our fatality prevention program and improvement in our safety procedures and practices. In addition, during the year, the Corporate Responsibility Committee reviewed community public health services including our malaria and other disease prevention programs in Indonesia and the DRC, our global social and sustainability programs and expenditures, community engagement efforts, political activity and spending practices, the safety reporting process at our operations, our risk management and sustainability programs, our human rights program, and our tailings stewardship program. The Corporate Responsibility Committee also reviewed and recommended to our board amendments to our Environmental Policy, Safety and Health Policy, Community Policy and Human Rights Policy, which our board approved. The Corporate Responsibility Committee reports to our board, 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 long-term, strategic and tactical operational guidance regarding our sustainability commitments and emerging issues. 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 all business unit Presidents and Vice President-level or senior staff from the safety, supply chain, human resources, sales, compliance, and land and water functions.

During 2015, the team reviewed and addressed key issues and projects including:

  • Environmental and Social Responsibility Scorecard relating to portion of executive compensation (see proxy statement)
  • Results of the site-level Human Rights Impact Assessment at our TFM operation in the DRC
  • Updated Principles of Business Conduct and associated company values to be published in 2016
  • Minimum sustainability commitments for consideration to promote to other commercial interests in the global mining sector, potentially through commodity associations
  • Emerging global regulations and initiatives related to product stewardship, including sustainability in the value chain and access to markets
  • Long-term water management and supply projects and associated critical partnerships
  • Our global sustainability program which is aligned with the ICMM Sustainable Development Framework, including observations from the independent assurance provider
  • Engagements with the socially responsible investment community and other financial stakeholders regarding
    safety, human rights, community development and environmental management
  • Input into the ICMM Climate Change statement in advance of Conference of Parties (COP) 21
  • Evaluating a variety of topics and learnings through participation in peer-to-peer, multi-industry
    associations with a sustainability focus

Stakeholder Engagement In the mining sector, project life-cycles can span decades. That is why early, transparent and consistent engagement with stakeholders is critical. Doing so creates mutually beneficial opportunities and reduces sustainability-related risks to our plans. We always seek strategic partnerships with host governments, communities and development partners to ensure the viability of our projects while delivering meaningful benefits, including post-closure.

Our operational-level teams regularly engage with community stakeholders, development institutions and nongovernmental organizations (NGOs). Mining operations maintain 5-year community engagement and development plans that identify affected or interested parties and programs for ongoing engagement and consultation. Issues raised through stakeholder engagement help inform the risks and opportunities identified in each operation’s sustainable development risk register and assist in developing social investment strategies. Resulting engagements with hundreds of entities occur via community foundations, formal grievance systems, workshops, participatory group panels or focus groups, town hall meetings and surveys. Engagement with stakeholders also occurs through regulatory consultation processes with local governments and community groups, including indigenous peoples, as part of project plans.

From a medium to longer-term risk radar perspective, Freeport-McMoRan’s corporate Sustainable Development Department and senior personnel regularly work with the socially responsible investment community and NGOs to understand issues of concern or interest and where Freeport-McMoRan may have influence to advance sustainability progress such as contributions to the UN Sustainable Development Goals. In 2015, our corporate team engaged with over 50 investor organizations, sustainability analyst firms, banking institutions, NGOs and multi-stakeholder initiatives on topics including fatality prevention, environmental management, revenue transparency, human rights, resettlement programs, water resources and community development.

Product Stewardship Environmental and social performance within operations and of product properties is of critical interest to many within the value chain and among global regulatory bodies. We generally view this interest as a positive opportunity to engage on the critical importance of our products for a sustainable future as well as on the sustainability performance of our operations. However, we want to communicate effectively and efficiently, and are cautious of the potential for redundant or unnecessary regulations, policies, initiatives or ad hoc requests for auditing schemes concerning our products and sustainability within our operations.

To remain a viable business entity, we must maintain market access for our products over the long term. Our multi-functional product stewardship team is led by our Vice President of Environmental Services and Sustainable Development and is coordinated with our global product sales and legal teams with support from technical experts. The group regularly addresses topics including:

  • Recent draft European Union and European Commission proposals regarding “conflict minerals” and responsible sourcing
  • Business-to-business relationships, which include advancing sustainability opportunities in geographic regions, by commodity or certain stages within the value chain; this includes responsiveness to due diligence information requests from value chain members
  • Analysis and input regarding globally emerging regulations, or policies from international governmental agencies regarding product labeling and operations due diligence
  • Emerging nongovernmental sustainability certification or reporting initiatives
  • Tracking and interfacing on the product stewardship work of trade associations, including the International Copper Association, ICMM, Cobalt Development Institute and International Molybdenum Association
  • Public health areas of interest that affect access to markets for our various products
  • Other associated current or emerging mandatory compliance requirements

Audits and 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 independent assurance of our sustainability framework, which covers the requirements 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. From time to time, customers or financial institutions also request to conduct sustainability-focused audits or assessments at certain facilities. In recent months, we have participated in multiple business-to-business engagements and sustainability reviews, particularly regarding our sustainability practices at TFM.

Project Development Sustainability Review Our Project Development Sustainability Review allows us to integrate sustainability considerations into mine development or expansion projects. The review is designed to help multi-disciplinary project teams identify risks, unintended consequences, trade-offs and opportunities so they may be adequately addressed early and continuously through each stage of project development. Project Development Sustainability Reviews may occur at the scoping, prefeasibility, feasibility and/or engineering/construction stages of projects, and are also applicable to exploration projects.

This review complements our operational Sustainable Development Risk Register procedure for existing operations. Since its inception in 2011, we have implemented reviews for 22 projects, including four during 2015. 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 if necessary. 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 implemented based on operation-specific factors and influences, including regional context, type of operation and social setting. It also includes longer-term monitoring of key trends and issues that can affect our business and stakeholders. Essential to our framework is the Sustainable Development Risk Register process, which prioritizes safety, environmental, social, economic and value chain challenges and opportunities based on our views of potential impacts to our business and the importance of these issues to stakeholders. As part of this process, local multi-disciplined leadership teams utilize a matrix with consequence categories, including potential safety, community, environmental and production impacts. Our Sustainable Development Department works with these teams to review processes to ensure prioritization of key business risks and implementation of action and monitoring plans. On an annual basis, a corporate, cross-functional team of senior personnel reviews the Sustainable Development Risk Registers of our major operations. This process provides a mechanism to ensure risk profiles are commonly understood at the operating and corporate levels.

Resulting sustainability focus areas identified through this Sustainable Development Risk Register process are reviewed annually by our Sustainable Development Leadership Team and communicated to the Corporate Responsibility Committee of the board. The focus areas have not changed significantly over recent years and are described throughout the sustainable development section of our website.



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