RESPONSIBLE SOURCING

The responsible sourcing programs we are advancing support human rights due diligence for suppliers of both goods and services as well as minerals and metals for further processing. For information on our survey-based due diligence platform called Freeport Compliance eXchange and our overall responsible sourcing program, please visit the Responsible Value Chains section of our website. The development of these programs is partly linked to the site-level HRIAs we have conducted to date, which have highlighted the need for more visibility into potential human rights risks within our supply chains.

HUMAN RIGHTS IMPACT ASSESSMENTS

HRIAs are the primary way we conduct specific human rights due diligence at our operations. They involve direct input from a broad cross-section of internal and external rights-holders and support continuous improvement of our management systems by testing their effectiveness in identifying and addressing potential, actual and perceived human rights risks and impacts. Our HRIAs are supported by Verisk Maplecroft, a third-party global risk analytics and advisory firm, using a methodology aligned with the UNGPs. Our Human Rights Dashboard defines the scope of these assessments. Each dashboard topic is mapped to specific human rights to support a comprehensive, rights-driven approach. Certain dashboard topics (like artisanal mining and Indigenous Peoples) may not be relevant at certain operating locations.

A variety of factors are considered when prioritizing sites for specific human rights due diligence. We consider which sites have a higher human rights risk profile, as well as whether a site has recently undergone or has potential for significant operational change, stakeholder feedback and other practical considerations regarding implementation.

In second-quarter 2019, we initiated implementation of an HRIA at our El Abra operation in Chile. Unfortunately, field work was deferred due to social unrest throughout the country occurring in late 2019 through early 2020. Then, as a result of COVID-19, we were unable to restart as planned. We are restarting the HRIA in 2021 with a virtual approach to field work and expect to complete the assessment during the year. In 2021, we also plan to start our Arizona HRIA and initiate planning for an HRIA at PT-FI, which will commence in 2022.

Site-level HRIA Methodology

Our ongoing program of site-level HRIAs act as a form of deep-dive verification. These assessments use a comprehensive, systematic and UNGPs-aligned HRIA methodology to identify and prioritize each operation’s human rights risks and impacts. In many cases, risks and impacts already have been identified via the site’s Risk Register process, management systems and grievance mechanisms. However, the application of a specific human rights lens means these site-level HRIAs are able to:

   Supplement findings with hidden or unreported risks and impacts that otherwise are not being captured, including through direct engagement with affected and potentially affected rights-holders
   Use a structured framework to prioritize identified risks and impacts using the specific criteria set out in the UNGPs (e.g., scope, scale and remediability)
   Deliver additional analytical insight into identified risks and impacts from a human rights perspective

As such, site-level HRIAs help us test our established management systems for effectiveness in identifying, mitigating and remediating human rights risks and impacts.

Assessing Impacts. The first step in our HRIA process is to conduct a desk-based assessment of human rights risks and impacts using:

    Verisk Maplecroft’s proprietary country-level Human Rights Risk Indices
    Third-party sources, including the media and civil society
    Site Risk Registers, grievance reports, health and safety reports, environmental reports, ICMM Performance Expectation Assurance management report, Social Performance plans, and other relevant sources
    An HRIA Self-Assessment Questionnaire completed by senior leadership at both corporate and site levels

This desk-based assessment informs planning for and implementation of fieldwork.

Extensive direct engagement in the field is core to our site-level HRIA process. Consultants from Verisk Maplecroft spend approximately two weeks visiting the operation and surrounding communities. During this time, they engage with a cross section of actually or potentially affected rights holders (or those with insight into the same) in and around the site and surrounding communities. Key criteria for identifying stakeholders to engage as part of our site-level HRIAs include the following:

    The likelihood that a stakeholder's human rights may be undermined by our business activities and/or relationships, as well as the potential severity of such an impact
    The severity of impacts linked to our business and/or relationships that have undermined a stakeholder's human rights
    The specific vulnerability of certain stakeholders to negative human rights impacts linked to our business and/or relationships
    The degree to which a stakeholder is either unwilling or unable to use conventional grievance mechanisms (whether public or linked to the company) to raise human rights concerns
    The degree to which stakeholders are able to provide insight into the existence and/or nature of any negative human rights impacts our business and/or relationships have on themselves, their communities and/or third parties

Employees, suppliers / contractors, community members and third parties are asked (by reference to the dashboard topics) about any negative impacts associated with the operation. Interviews are conducted on both an individual and collective basis in locations and ways that encourage transparent and constructive discussions. With the exception of our own managers, who offer their professional analysis of the site’s human rights risks and impacts, interviewees are offered anonymity before engagement. Engagement is focused on a living list of stakeholders that evolves throughout the engagement, due to stakeholder recommendations and the identification of new lines of inquiry. Interviews are conducted in the applicable local language and sometimes with translation support.

These interviews help us:

    Verify the initial desk-based assessment of human rights risks and impacts
    Capture less "visible" risks and impacts (e.g,. in the event rights holders were unable or unwilling to use sites’ established grievance mechanisms or to raise issues with third parties)
    Gain insight into broader human rights dynamics that are less focused on specific incidents or complaints likely to be recorded in the sites’ established grievance mechanisms – and as such provide a richer picture of risks and issues
    Understand the specific impacts associated with identifiable vulnerable groups, such as women, children, minority groups and the very poor
    Identify any misperceptions among stakeholders

Direct input from rights holders also helps us test the effectiveness of our established human rights-relevant management systems in identifying and addressing human rights risks and impacts.

The “but-for” test is applied in relation to the identification of human rights impacts caused by, contributed to by, or otherwise linked to the site, its activities or its business partners (i.e., But for the existence of the site, its activities and relationships, would the impact have taken place or been as severe?). Alleged impacts are included in the assessment even if there is uncertainty regarding the supporting facts and/or the causative relationship.

We include a parallel exercise to identify the degree to which the site(s) positively maintains and/or advances human rights within their areas of influence. While understanding that positive human rights impacts cannot offset negative impacts, this exercise provides a more comprehensive view of our overall human rights performance.

Following completion of the assessment, Verisk Maplecroft presents the findings to the site management team and members of the corporate Human Rights Working Group. The results also are reported to both the Sustainability Leadership Team and the Corporate Responsibility Committee of the Board.

Integrating Findings and Taking Action. After completion of an HRIA, operations use the HRIA results to update their Risk Registers.

Site-level HRIA reports include recommendations on priority areas for investigation and/or action. These recommendations are reviewed by site management in collaboration with the corporate Sustainability team. Where HRIAs identify gaps in a site’s established human rights-relevant management systems, operations personnel work with cross-functional teams to develop HRIA Action Plans. HRIA Action Plans support continuous improvement of existing systems and processes. Where necessary, they establish new measures to investigate, prevent, mitigate and/or remedy human rights risks and impacts.

We are enhancing our process for integrating HRIA Action Plans into and tracking progress within the site’s existing Risk Register process. In 2019, we reviewed our HRIA Action Plan process and developed guidance to assist operations subject to an HRIA implementation process. A desired outcome field was added to our HRIA Action Plan form where sites are asked to indicate the desired outcome associated with each action item (e.g., what would indicate the action item has been completed). Desired outcomes can be measured using qualitative or quantitative indicators. Such indicators are intended to help sites better assess the effectiveness of action item implementation and whether or not the actions taken have produced the desired results. The corporate Sustainability department and senior, multi-disciplinary experts coordinate with site personnel so that prioritization processes are consistent with corporate procedures and provide associated guidance.

Communicating Performance. We report on our human rights programs and due diligence in the Human Rights section of our Annual Report on Sustainability. This is in addition to content describing our approach toward managing our focus areas as well as relevant performance outcomes. We also organize periodic international stakeholder calls and make presentations via multi-stakeholder forums during which we provide updates on our human rights programs and report on our site-level HRIAs. This takes place in the context of our broader program of ongoing Stakeholder Engagement.

At a local level, how we communicate our human rights performance varies by site and geographic / social context. For recent examples, please refer to our Annual Reports to the VPs Plenary in the Reports and Documents section of our website.

Lessons learned from site-level HRIAs help to guide our global human rights approach and subsequent HRIA work at other operations.

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