Corporate society responsibility freeport presentation

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Corporate society responsibility freeport presentation

  1. 1. GROUP 2 YIU PAK YIN, VALERIE 11238844D CHANDRAATMADJA, ANGELINE 11708622D
  2. 2. How DIFFICULT Is It For MINING COMPANIES To Conduct CSR?
  3. 3. Company Background • Freeport – McMoRan Copper & Gold • Headquarter: Phoenix, Arizona • President: Richard C. Adkerson • Chairman: James R. Moffet • Incorporated under the laws of state of Delaware on Nov 1987 • Global Employee: ~ 36100
  4. 4. Organizational Chart
  5. 5. FCX • US based natural resource company • Mineral assets, oil and natural gas resources • A leading international company in the industry • The world’s largest producer of molybdenum
  6. 6. Operating Mines
  7. 7. Personnel 0 5000 10000 15000 20000 25000 30000 35000 US Indonesia South America Africa Others Contractors' Personnel Employee
  8. 8. Financial Status 1910 2212 2371 4179 5790 16939 17796 15040 18982 20880 18010 640 823 704 2177 2869 6555 -12710 6503 9068 9140 5814 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Operating Income/Loss From Year 2002 to 2012 Revenues (in millions) Operating Income/Loss (in millions)
  9. 9. Environmental Obligation • Various law and regulation (e.g., CERCLA, state laws) • Pollution, Disposal of hazardous wastes • More than 100 active remediation projects • Increasing costs ( especially in Indonesia)
  10. 10. Corporate Image • The largest publicly traded copper and molybdenum producer • Excluded from the investment portfolio of the Government Pension Fund of Norway in 2006 • The nominee of The Public Eye Award in 2012
  11. 11. CASE STUDY Freeport – McMoRan Copper & Gold IN INDONESIA
  12. 12. • Good CSR practice 1. Participate in Community investment 2. Assist in Public Health 3. Establish performance target • Bad CSR practice 1. Bribery in Indonesia 2. Environmental Pollution 3. Low Wages
  13. 13. Participate in Community investment • Invested over $11 million in STEM education programs • Established community foundations or social funds in Indonesia, Peru, the United States and the DRC • Launched Freeportinmycommunity.co m to record those good CSR practice from Freeport
  14. 14. Assist in Public Health • Coordination with local governments and NGOs to provide significant resources to help communities. • Strictly Prohibited the usage of Mercury in mining gold or copper • Incident rate of Malaria is reduced with the aid of Freeport donation and cooperation of NGOs and governements
  15. 15. Establish performance target • Set up a list of performance in CSR with a target date • Targets focused on different area like business ethics, human right, environmental issue etc. • Printed on the sustainability report as an evidence for the company to follow
  16. 16. Bribery • Freeport paid over 70 million USD to the police in Indonesia during 2001 – 2010 for security reasons • National Police in Indonesia claimed that the money is paid for “lunch meal” for police • Indonesian Corruption Organization reported to the US Department of Justice about this issue
  17. 17. Environmental Pollution in Pupua Province • Freeport threw dumps over 100,000 tons mine dumps into river without any treatment everyday • Cause caused flooding, re- routing of the rivers, and destruction of forests nearby.
  18. 18. Long Working hour, Low Wages • 22 thousand people working in Freeport • Average working hour :12-14 hours per day • Earn only 3.5 dollars per hour in 2011, (while the lowest wage of Freeport workers in the world between 30-50 dollars per hour.) • Labour strike triggered during 2012 and several people died in the strike • Freeport agreed to raise over 20% of the wages in 2012
  19. 19. BABSON FRAMEWORK 1 • Identify Issues (Difficult to implement CSR in Mining Company) 2 • Gather Information 3 • Brainstorm alternatives 4 • Evaluate alternatives from various ethical perspectives 5 • Make a decision and examine your confidence in it from different ethical perspectives 6 • Prepare to explain your ethic 7 • Reflect on your decision making process.
  20. 20. 10 PRINCIPLES Company Stakeholder Responsibility 1. stakeholder interests 2. stakeholders are real and complex people 3. solutions that satisfy multiple stakeholders 4. intensive communication and dialogue 5. voluntarism 6. Generalize the marketing approach. 7. Never trade off the interests 8. primary and secondary stakeholders. 9. Constantly monitor and redesign processes 10. Act with purpose. Act with aspiration.
  21. 21. International Council on Mining and Metals Sustainable Development Framework Implement and maintain ethical business practices and sound systems of corporate governance. Uphold fundamental human rights and respect cultures, customs and values in dealing with employees and others who are affected by our activities. Implement risk management strategies based on valid data and sound science. Seek continual improvement of our environmental performance.
  22. 22. International Council on Mining and Metals Sustainable Development Framework Contribute to conservation of biodiversity and integrated approaches to land use planning. Facilitate and encourage responsible product design, use, re-use, recycling and disposal of our products Contribute to the social, economic and institutional development of the communities in which we operate. Implement effective and transparent engagement, communication and independently verified reporting arrangements with our stakeholders.
  23. 23. Freeport Framework
  24. 24. Evaluation of Freeport’s CSR Practices • Implement and maintain ethical business practices and sound systems of corporate governance Comply with or exceed the requirements of host-country laws and regulations Freeport paid over 70 million USD to the police in Indonesia during 2001 – 2010 for security reasons
  25. 25. • Uphold fundamental human rights and respect cultures, customs and values in dealing with employees and others who are affected by our activities Average working hour :12-14 hours per day Earn only 3.5 dollars per hour in 2011
  26. 26. • Seek continual improvement of our environmental performance Implement an environmental management system focused on continual improvement to review, prevent, mitigate or ameliorate adverse environmental impacts threw dumps over 100,000 tons mine dumps into river without any treatment everyday
  27. 27. • Contribute to conservation of biodiversity Plan operation activities to minimize the impacts on the ecosystem flooding, re-routing of the rivers, and destruction of forests nearby Destroy the ecosystem and natural habitats of endangered species Decrease biodiversity
  28. 28. • Contribute to the social, economic and institutional development of the communities in which we operate Low wage but long working hours Labour strike triggered during 2012 and several people died in the strike
  29. 29. • Implement effective and transparent engagement, communication and independently verified reporting arrangements with our stakeholders Under-table transactions with local government Corruption with invalid data and report Badly harm the interest of stakeholders
  30. 30. ETHICAL MINING Gold industry added at least USD$210billion of gross value added to the global GDP in 2012. 26% of exports 36% of exports 75% of exports GHANA TANZANIA MALI (AFRICAN ECONOMIC OUTLOOK, 2013) Papua’s economic dependence on mining is approximately 30%. (Papos, 2013)
  31. 31. Quantifying the Impact of Responsible Gold Mining
  32. 32. MINING COMPANIES are GENERALLY UNETHICAL. TRUE OR FALSE?
  33. 33. Expectations from society • Last year, Freeport-McMoRan invested more than $23 million in Arizona communities, most of which were in Southern Arizona, focusing on education, health, environmental improvement and economic development investments. (Freeport in My Community, 2014) Why are they unethical? Why only in Arizona? Why not so much in other areas? (Government regulations, Education of community, etc.) Conflicting Shareholder Goals • It is difficult for companies to conduct CSR practices as a charity. This is why Gov’t regulations are important – where they act as an excuse to unwilling shareholders. Nature of Work Lack in Mining Technological Developments focusing on safety • In 2012, investment in technology R&D by the mining industry was a mere 0.2% of revenue. Other industries invest as much as 30%. (Kachan, 2014)
  34. 34. Freeport. Are they really unethical? • The Papuan community led by Governor Lukas Enembe has requested for a 10% shares from Freeport for the compensation of their many years of operations in Papua and their little contributions to the community. (Jakarta Post, April 19 2013.) This is despite the fact that • Freeport has paid USD$955,600,000 in royalties and taxes to the Indonesian government in 2012 (Kurniawan, I. , 5 Feb 2013) 841200000 52800000 34500000 27100000 Breakdown of Royalties and Taxes Central Gov't District Gov't Provincial Gov't Other Gov't Bodies Papuans contested that the money is redistributed as such there were insufficient developments done in Papua. The request to be a shareholder is one so that they can obtain direct benefit from their contributions to Freeport.
  35. 35. What can you expect and cannot expect from a mining company. CANNOT CAN Be Totally Environmentally Friendly • Minimize impact through R&D • Make recurrent improvements on existing practices (stop chemical dumping) • Prevention and mitigation Guarantee absolute Safety of Workers • Pay better wages to compensate for risk • Buy better technologies to aid mining activities
  36. 36. Conclusion Above all while they are bound to take some things from the community that they possibly cannot restore, they have the power to build infrastructures that can help build the lives of the people. It’s all about give and take. MNCs: • Double-edged sword. • They could either hurt communities or help them and both ways it is one that has significant impact. Hence, they should be carefully approached. Countries should be aware of their bargaining power Country > Resource bound MNC
  37. 37. Reference • http://www.thejakartaglobe.com/archive/police-admit-to-receiving- freeport-lunch-money/#.Uxs6zfmSxoM • http://www.thejakartaglobe.com/archive/icw-to-report-freeport-to- us-department-of-justice/484928/#.Uxs6iPmSxoM • http://www.bloomberg.com/news/2013-10-22/freeport-indonesia- agrees-wage-increase-deal-to-avert-strike.html • http://www.bbc.co.uk/news/business-15398639 • http://www.fcx.com/sd/pdfs/WTSD_2012.pdf • http://www.nytimes.com/2005/12/27/international/asia/27gold.htm l?pagewanted=all&_r=0 • http://www.earthworksaction.org/files/publications/GoldenRules_FI NAL.pdf • http://www.circleofblue.org/waternews/2012/world/global-gold- rush-the-price-of-mining-pursuits-on-water-supply/
  38. 38. Reference • http://www.thejakartapost.com/news/2013/04/19/papua- administration-wants-10-freeport.html • http://us.bisnis.news.viva.co.id/news/read/387791-siapa-penikmat- terbesar-pajak-dan-royalti-freeport- • http://www.africaneconomicoutlook.org/en/countries/west- africa/mali/ • http://www.papuapos.com/index.php/warta-daerah/kab- tolikara/item/2660-ekonomi-papua-bergantung-oleh-tambang • http://www.freeportinmycommunity.com/ • http://www.aljazeera.com/news/asia- pacific/2011/12/2011121442219366287.html • Kachan 2014 http://www.kachan.com/pressrelease/new-emerging- green-mining-technologies-report

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