Freeport rejects modest environmental motionPublished by MAC on 2009-05-18
In view of the enormous destruction being wreaked on people and the environment by Freeport-Rio Tinto's mining operations in West Papua, proposing the company appoint an "environmental expert" to its board doesn't sound earth-shattering.
Indeed, some would claim that the proposal doesn't go anywhere near far enough.
Nonetheless, the company has urged its shareholders to reject the motion, which will be submitted at Freeport's annual general meeting in June.
The world's biggest copper mining outfit claims it's not "...in our shareholders' best interests to require a particular type of specialist on our board." After all, Freeport goes on, the board already has "diverse" representation from directors experienced in "geology, business, finance, international relations and public affairs."
Sometimes a peremptory statement like this speaks volumes about a company's innate "philosophy" - and lack of moral scruple.
European, U.S. institutions push copper mine giant Freeport-McMoRan on board post
By Hugh Wheelan, Responsible Investor (UK)
12th May 2009
A coalition of some of the world's biggest pension fund investors from Europe and the U.S. is campaigning to persuade shareholders in Freeport-McMoRan Copper & Gold Inc., the U.S.-listed copper producer - the largest in the world - that the company should clean up its controversial pollution record by appointing an environmental expert to its board.
The five New York City Pension Funds have joined forces with APG, which manages the €173 billion ($235.8 billion) assets of the Dutch ABP pension fund for civil servants, the Swedish government AP pension buffer funds and the General Board of Pension and Health Benefits of the United Methodist Church in the U.S., to put the proposal on the ballot at Freeport's June 11 annual general meeting in Wilmington, Del.
The investors are going head-to-head with Freeport's board of directors, which has unanimously recommended that shareholders oppose the motion. Freeport said: "As a corporate governance matter, our board does not believe that it is in our shareholders' best interests to require a particular type of specialist on our board. We believe that our board of directors represents a diverse group of individuals with broad experience in geology, business, finance, international relations and public affairs."
The company's environmental record has been a regular target of institutional investor ire. In 2006, the huge Norwegian Government Pension Fund blacklisted the company over its disposal of waste residue into a local river at its Grasberg mine in West Papua, Indonesia. Investors say the practice is illegal in many countries. Earlier this year, the Norwegian fund also pulled €551 million in investments from Rio Tinto, the London-listed international mining group, because of a joint venture with Freeport at the Grasberg mine.
In the latest campaign, the Freeport investors say the company has been slow to issue what they consider to be full information on its assessment and monitoring of environmental and health risks associated with the residue disposal at Grasberg. The funds say this is damaging to their interests as shareholders because of risks that the company's environmental performance falls short of internationally accepted standards leading to difficulties in accessing capital for new projects and obtaining necessary regulatory licenses. Freeport says it has consistently met internationally acceptable standards for environmental management.
The investors said: "We believe it could be highly beneficial for the company to address the environment at the most strategic level in the same way that it has addressed human rights - in other words, to appoint an appropriate specialist to the board. We envisage a board director whose background combines acknowledged environmental commitment and expertise with leadership experience in a business or other appropriate context. This appointment would place Freeport at the forefront of board-level practice on environmental and social issues in the mining industry."
The investors hope to mirror the success of a 2005 campaign led by institutions including the New York City pension funds that was critical of Freeport's human rights practices and links with the Indonesian military. Freeport subsequently commissioned the independent International Center for Corporate Accountability at City University, New York, to carry out two audits of Grasberg and appointed Judge Gabrielle McDonald as a director and special counsel on human rights. The investors say Freeport appears to have responded positively and transparently on human rights.
Hugh Wheelan is Editor of www.responsible-investor.com