Corporate Profile

Sustainability Management within Codelco

Codelco’s Board of Directors has appointed a Corporate Governance and a Sustainability Committee whose main role is to act as a supporting consultatory entity to the Board with regards to organizational and sustainability policy matters. Within this scope, it supervises the effectiveness of corporate policies and of the management systems related to safety, environment, and society, periodically assessing the company’s performance in these matters.

The exercise of sustainability is upheld by management instruments such as regulations, directives and guidelines that are developed from corporatelevel policies:

Corporate Policy on Sustainable Development: stipulates commitment to sustainable development and social responsibility as an inherent part of the business.

Corporate Policy on Safety, Occupational Health and Environmental Management: the company is committed to management focused on people, which protects the life, physical integrity, and health of employees and contractor workers, as well as of the people in its operation’s surroundings.

During 2010, Codelco’s sustainability management was mainly carried out through the Vice-Presidency of Development and Sustainability and those units of the Vice-Presidency of Marketing related to the defense and development of markets. Both Vice- Presidencies are at the highest organizational level, reporting to the Corporation’s Executive Board.

In divisions, sustainability was managed (always in the highest levels of the organizational structure) by sustainability managements, occupational risk managements, or their equivalent, according to the size and characteristics of each division.

What is Codelco’s Approach? Manage sustainability as one of the fundamental pillars of the business’ entire value chain, so it will be feasible in the long term, aligned with our Value Statement and under the principles of social responsibility. This means, delivering high quality products that are useful and beneficial to society, in whose productive process we optimize the use of resources, mitigate environmental impacts, look after the safety and health of all our workers, contribute to the communities neighboring our operations and defend and promote copper markets. Codelco aspires to be a highly responsible company in all aspects of sustainability, and to have the social license and high reputation to operate, develop new enterprises, and To know the details of these policies, visit www.codelco.com market its products.

Sustainability Strategic Planning

To plan its future actions, the Corporation develops business plans whose main challenge is incorporating the entire organization to its objectives and short, medium, and long term sustainability goals through its strategic agenda and five principal axes:

• Preparing the sustainability organization for the future: adapting the organization so it can respond to the ever greater environmental requirements. Civil society will exercise an increasingly active role in this matter, which will translate into growing national and international regulations on the majority of our industry’s aspects
• Achieving sustainable development: gradually adapting old installations to current operating standards, and for new projects, complying with the current legislation and ensuring that, from the start, the requirements of the new environmental regulations are met. It is also necessary to close the gaps in specific sustainability matters, detected through international diagnostics and the opinions gathered from our stakeholders throughout this reporting period.
• Making efficient use of resources: the challenge is to establish policies that allow committing to and adding transparency to goals that guarantee the efficient use of resources, as an answer to global requirements that demand decreasing use of water, alternative water supply sources, and reducing our carbon footprint and greenhouse gas emissions. This way, Codelco will contribute to mitigating climate change phenomena, a principal global objective.
• Institutionalizing social responsibility: moving towards a concept of community development, and incorporating management that invites the communities to work together for their development; namely, overcoming the traditional notion of community management. At the same time, Codelco proposes to broaden its scope in community relation matters beyond local management to a scope of regional and national actions, thus increasing its reputation capital. The Corporation further commits to social responsibility, adapting its management model to international standards (ISO 26000) and institutionalizing this regulation as an integral part of the business.
• Regulatory compliance: complying with environmental regulations is a main challenge in terms of transparency. Codelco faces new auditing scenarios where it must answer for complying with the commitments stipulated in the Environmental Authorizations.
• Our Safety and Occupational Health Strategy is described in the chapter “The Safety and Health of our Workers”.

Management systems

4.9Procedures of the highest governance body for overseeing the organization’s identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles. The management systems Codelco has been implementing since 2003 are tools that seek to contribute to creating value, as well as achieving standards of excellence in assets management, sustainability, and human development.

Currently, all divisions in the Corporation and its Corporate Headquarters are certified under ISO 14001 standards for environmental management, and OHSAS 18001 standards for safety and occupational health.

Additionally, during 2010 the Community Projects Management System (SIGO) and the Community Relations Manual (MARCO) were updated, both aimed at directing and supporting bonding actions between the company and the surrounding communities.

The certification status of each division for 2010 is as follows:

 

Sustainability policies and Regulations

4.8Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation. 4.12Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses. In accordance with the Value Statement which was approved during 2010, Codelco continues to be governed by the policies and regulations that frame its commitments and actions:

• Sustainable Development Policy (2003), whose commitments are aimed at the sustainable development of the Corporation, especially in terms of environmental protection, worker safety and health, community relations and market defense.
• Corporate Policy for Safety, Occupational Health, and Environmental Management (2007), which stipulates the commitment to a business management that protects the health and quality of life of its workers, strengthen ties to the community, and respect the environment.
• Policy on Quality of Life (2003), aims to ensure labor stability and quality of life for those working in the Corporation.
• Policy on Alcohol, Drugs, and Tobacco (2003), which is geared towards preventing addiction and supporting workers and their families who voluntarily seek help to overcome addiction problems.
• Policy on Procurement, stipulates, among other, the commitment to promote responsible management among suppliers of goods and services in environmental, safety, and occupational health matters.
• Policy on Commercial Ethics, stipulates the principles, moral values, and behavior guidelines that outline Codelco’s marketing management style with its suppliers, contractors, and clients.
• Policy Sales and Marketing, focused towards the development and defense of international markets, with special attention given to sustainability practices.
• Codelco Corporate Gudiance Nº 24 (NCC 24), incorporating Sustainablility Risk Analysis to investment projects and operations.
• Commitments to Indigenous Peoples (2004): Codelco incorporates development criteria in the decision-making process to contribute in the generation of favorable conditions, which stimulate and reinforce the development of communities neighboring operations, and the establishment and maintenance of effective management systems regarding community relations within a framework of prevention and continuous improvement.
• Community Relations Manual (MARCO, revision 1), guides and supports permanent community management of the divisions and those associated to projects, positioning it as a key aspect for sustainability.

4.11Explanation of whether and how the precautionary approach or principle is addressed by the organization. In accordance with Codelco’s strategic guidelines, its actions are subject to the precautionary principle in article 15 of the Rio Principles, which stipulate that “when there is danger of grave or irreversible damage, lack of absolute scientific evidence shall not be used as reason to postpone adopting cost-effective measures to avoid degrading the environment”.

Adherence to external policies

4.12Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses. Codelco adheres to the following international declarations and initiatives:

• Business Charter for Sustainable Development of the International Chamber of Commerce.
• Toronto Declaration of the International Council on Mining and Metals (ICMM).
• Joint declaration of the World Economic Forum “Global Corporate Citizenship: The Leadership Challenge for Chief Executive Officers and Boards of Directors”.
• Principles of the Partnering Against Corruption Initiative (PACI).
• United Nations Convention on the Rights of the Child.
• Convention 138 of the International Labor Organization (ILO).

Memberships

4.13Memberships in associations (such as industry associations) and/or national international advocacy organizations in which the organization: * Has positions in governance bodies; * Participates in projects or committees; * Provides substantive funding beyond routine membership dues; or * Views membership as strategic. The Corporation has a key presence in national and international instances that debate and act upon the relationship between the business world and sustainability.

Since 2007, Codelco presides the International Molybdenum Association (IMOA), an organization whose objective is to promote the sustainable use and development of this metal.

It also forms part of the following organizations:

• International Copper Organization (ICA), since 1989.
• International Molybdenum Association (IMOA), since 1989.
• Chilean Mining Council A.G., since 1998
• World Business Council for Sustainable Development (WBCSD), since 2000, and the Chilean Chapter of the WBCSD, since 2004.
• Global Reporting Initiative (GRI), since 2003.
• National Security Council, since 1953 (member since its foundation through Codelco’s predecessor companies).
• Latin American Social Security Organization (OISS), since 2006.
• REACH (Registration, Evaluation and Authorization of Chemicals) Consortium for molybdenum and copper, since November 2007 and March 2008 respectively.
• World Economic Forum (WEF), since 1997.
• Acción RSE, since 2010.

Codelco and its Stakeholders

4.14List of stakeholder groups engaged by the organization. 4.15Basis for identification and selection of stakeholders with whom to engage. 4.16Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group. 4.17Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting. Codelco considers as stakeholders those people or groups of people who may be affected by, or who hold an influence over, the Corporation’s activities. Through its different areas of operation, Codelco relates to each of them according to the needs and requirements of each case, by means of diverse liaison mechanisms. Through this logic, fifteen stakeholders have been identified that take the following groups into account:

The information gathered by means of these mechanisms and by means of diverse studies permits assessing the Corporation’s activities, generating new work plans, incorporating actions and elaborating the present Sustainability Report.

Besides the interaction mechanisms mentioned above, the Annual Report and the present Sustainability Report correspond to transversal means of communication, as they are destined to all stakeholders without distinction. The Corporation web site, corporate and divisional magazines are also transversal means of permanent communication.