Openness and transparency
Xstrata's Business Principles state our commitment to operate with the maximum transparency that is commercially possible in every aspect of our business. We publish regular information about our business via our website, regulatory news services, the media and presentations to key stakeholder audiences. Public communications are made available from our website simultaneously or as soon as possible after publication or announcement, in accordance with Group Communications Guidelines.
We actively seek feedback on our non-financial performance and reporting from all our stakeholders. Contact names and details for direct feedback are provided on the inside back cover of this report. Feedback can also be provided through our website www.xstrata.com/sustainability_feedback or via the dedicated email address .
Bribery and corruption
A key element of the Business Principles is our commitment not to offer, solicit or accept any form of bribe. We support free enterprise and compete fairly for business, with scrupulous regard for those regulations which promote competition and protect consumers. Our Business Principles also state our commitment not to allow personal financial interests to be brought into conflict with the interests of the Company. It is our policy not to make political donations of any type.
We have in place a formal schedule which sets out, from the Xstrata plc Board down, the responsibility levels for all approvals and authorisations. This is subject to regular review by the Board. The Group Fraud Policy, including guidance on identifying and reporting fraudulent or corrupt activity, is communicated regularly to all employees and contractors. Each commodity business has clear and defined policies and procedures governing financial assistance and the prevention of political donations, bribery or fraud. Letters of assurance are provided to the audit committee of each commodity business through a process of questionnaires, completed at site, divisional and commodity business level, and are reported to the Board Audit Committee. The letters of assurance verify that Group Authority Levels have been complied with, that every aspect of Xstrata's Business Principles has been upheld, that all employees have been made aware of the Fraud Control Policy and that any incidents of non-compliance have been reported and investigated.
Xstrata's Internal Audit function regularly assesses and reviews Xstrata's operations and commodity businesses. Community and government relations have been identified as a key risk for our South American operations and in 2005, Internal Audit carried out a project management review at the Las Bambas exploration project in Peru including a review of processes and controls to ensure compliance with Xstrata's Business Principles and policies (including financial assistance, donations and procedures to prevent bribery and corruption). Similarly, a review of processes and controls for managing community and government relations at the Alumbrera operation in Argentina was performed in 2003.
We engage with government and other policy making bodies both through a number of industry and international organisations and directly on relevant issues. A full list of our membership of industry and other associations is available from our website.
Extractive Industries Transparency Initiative
Xstrata supports the Extractive Industries Transparency Initiative (EITI) to increase transparency over company payments and government revenues in the extractives sector in resource-rich countries. Twenty countries have either endorsed, or are now actively implementing the EITI across the world. Xstrata does not currently generate revenues from any of the countries implementing or endorsing the EITI but is active in Peru, through the Las Bambas exploration project. The Peruvian Government endorsed the EITI in 2005 and an action plan for implementation has been drafted through a multi-stakeholder committee. In addition, the Ministry of Energy and Mines signed a Memorandum of Understanding with the World Bank in October 2005, outlining an agreement for support for implementation of the action plan. Xstrata's activities in Peru comprise a drilling programme at the Las Bambas site in the Cotabambas and Grau provinces, to assess the potential to construct and operate a copper-gold-molybdenum mine at the site in future. In this regard, we welcome the positive steps undertaken by the Peruvian Government to implement the EITI during 2005.
Human rights
As set out in our Business Principles, we endorse the principles set out in the United Nations Universal Declaration of Human Rights and strive to reflect and promote these within our business, as well as with those suppliers and customers with whom we do business. We do this by engaging with suppliers, contractors and business partners to communicate our Business Principles and to ensure that our policies and management philosophy are shared by the companies we work with and employ. We monitor the policies and performance of contractors, suppliers and business partners, as set out by our HSEC Standard: Contractors, Suppliers and Business Partners. Our toll-free confidential ethics line provides an anonymous means of communication to Xstrata's Board Audit Committee to report any transgressions of our Business Principles.
The concept of human rights encompasses a broad spectrum of basic rights afforded to each human being. The main area of focus for Xstrata are the human rights of employees, contractors, business partners, community members and others affected by our operations. These include the right to work for equal pay, to associate freely, to a safe and healthy work environment, to non-discrimination and fair treatment and to legal rights, as well as the right to be treated with dignity in a manner that respects cultural heritage, traditions and norms.
One area of particular focus is the use of security firms and the procedures employed governing the use of force. In areas where we use security personnel or employ private security firms to protect our people and our assets, we ensure that appropriate human rights training has taken place and, in line with all employees, contractors and suppliers, monitor compliance to our Business Principles and HSEC Policy Standards. Xstrata's operations are primarily based in Australia, South Africa and Europe, with one operation in Argentina, one project in Peru and one in Canada. For operations or projects in geographic regions with a higher risk of human rights transgressions, we develop procedures and guidelines for employees, contractors and suppliers, to ensure Xstrata's Business Principles are put into practice in the local context.
HSEC Document Hierarchy
Risk management
Xstrata has a robust process in place to identify and manage risks at the operation, division, commodity business and Group level. Risk registers are maintained at every operation, division and commodity business, corporate offices, and for the Group as a whole. Risks are assessed in terms of likelihood and potential consequence, and the controls to mitigate or manage these risks are also rated for effectiveness. Risk registers incorporate every risk identified, including financial, social, environmental, ethical, regulatory and legal risks. During 2005, a web-based risk management system was rolled out across the Xstrata Group enabling enhanced proactive management of this aspect of our activities, and bringing greater focus to the risks affecting each commodity business. The Group-wide risk management process is led by the Global Head of Internal Audit and Risk, who reports directly to the Board Audit Committee.
For environmental risks, aspect registers are reviewed annually by the majority of sites and the remainder review their registers every two years. This is based on the risk profile or when there is a material change to a process or operation.
Xstrata's Risk and Change Management Standard requires HSEC risks to be managed throughout all project phases, including exploration, pre-feasibility, conceptual design, detailed design, procurement, construction, commissioning, operation, decommissioning, closure and disposal. A rigorous Environmental Impact Assessment/Statement (EIA/EIS) is completed for all new projects and significant expansions of existing operations.
Crisis and emergency response
Xstrata's Emergencies, Crises and Business Continuity Standard requires that all foreseeable emergencies be assessed and planned for including potential HSEC impacts. Emergency response teams are in place at each operation, linked by a commodity business plan. Plans must be developed in consultation with external agencies and tested at least annually. Employees and third parties are trained in emergency response and improvements made as a result of testing and assessment. The HSEC Assurance Programme assessed every site against this standard. The average score for the Group was just below the good standard, at the top end of the satisfactory range.