Case study: How Fortescue promotes ethical business behaviour
Consistently producing 170 million tonnes of iron ore per annum, Fortescue is one of the largest global iron ore producers, also recognised as the lowest cost seaborne provider of iron ore into China. Developing and maintaining a corporate culture committed to ethical behaviour and compliance with the law, is a top priority for Fortescue. Tweet This!
This case study is based on the FY18 Corporate Social Responsibility Report by Fortescue published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
Fortescue’s commitment to doing business with integrity and honesty is built on its Values, the professionalism of its employees and a collective responsibility to act with accountability and transparency. In order to promote ethical business behaviour Fortescue took action to:
- implement a Code of Conduct and Integrity
- apply a Whistleblower system
- implement an anti-bribery and corruption compliance programme
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With this case study you will see:
- Which are the most important impacts (material issues) Fortescue has identified;
- How Fortescue proceeded with stakeholder engagement, and
- What actions were taken by Fortescue to promote ethical business behaviour
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What are the material issues the company has identified?
In its FY18 Corporate Social Responsibility Report Fortescue identified a range of material issues, such as employee health and safety, creating employment and business opportunities for Aboriginal people, eradicating slavery in the supply chain, building local communities, protecting biodiversity and water resources. Among these, promoting ethical business behaviour stands out as a key material issue for Fortescue.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups Fortescue engages with:
To identify and prioritise material topics Fortescue engaged with its stakeholders through the following channels:
| Stakeholder Group | Method of engagement |
| Employees | · Regular, open, internal communication events including whole-of-team weekly meetings and senior leader forums with the CEO and Core Leadership team · Leadership Excellence Pathway to provide professional development for employees · Annual Safety Excellence and Culture Survey and regular engagement on safety performance and improvement · Formal employee recognition programmes, such as Northern Spirits for exceptional performance, and Legends events for employment milestones · Internal communication channels including pre-start meetings, internal social media platform; Workplace, Company-wide emails, site notices, intranet, internal newsletter, Fortescue TV screens, live-streamed Workplace meetings and events · Ongoing implementation of Fortescue’s FY18 Diversity Plan · Celebrating Fortescue’s 15 years of milestones through live streaming the One Billionth Tonne celebrations, 10 years since first ore was shipped event and the Company’s 15th birthday |
| Customers | · Regular engagement, including face to face and electronic communication · In-country presence through offices in Shanghai and Singapore · Highly skilled and experienced marketing and sales team · Quality control of product · Implementation of targeted, continuous improvement programmes · Visits to customer operations · Customer visit to Fortescue’s Cloudbreak operations in May 2018 |
| Shareholders and Investors
| · Regular briefings including quarterly, half year and full year results · Regular meetings and briefings of financiers and investors including site visits · Email alert systems that allow interested parties to register for automatic ASX lodgement notifications · Participation in investor/advisor sustainability assessments including the 2017 Dow Jones Sustainability Index Assessment · Annual General Meeting |
| Local communities
| · Community development plans · Dedicated community office and community engagement team · Meaningful community consultation and engagement · Fortescue-hosted community events · Fortescue community support programme · Partnerships and investments in significant projects · Fortescue’s Vocational Training and Employment Centre (VTEC) · Dedicated heritage, pastoralist and Aboriginal development teams · Implementation of Fortescue’s Stakeholder Engagement Framework · Local procurement targets and strategy · Targeted proposal presentations |
| Native Title Partners
| · Dedicated Aboriginal heritage, Native Title and Aboriginal development teams · Progressive negotiated review of LAAs and registration of ILUAs · Regular communication and consultation with Native Title groups and prescribed working group committees · Support for Aboriginal heritage protection and promotion activities · Continued growth of the Billion Opportunities Programme · Fortescue’s Vocational Training and Employment Centre (VTEC) · Targeted and tailored business development meetings · Fortescue hosted business and employment exhibitions and events · Local content procurement targets and strategy · Dedicated community office and community engagement team · Development and implementation of multiple programmes for education and professional development such as high school scholarships, cadetships, school and work based traineeships and University Graduate Programme · Continued participation in national policy debates |
| Suppliers and contractors
| · Regular meetings, communication and reviews with strategic suppliers and contractors · Strategic relationships and partnerships developed with contractors and suppliers · Continued growth of the Billion Opportunities Programme · Local content procurement targets and strategy · Strong policy framework · Early engagement with key contractors and suppliers for major projects · Practical solutions to support Aboriginal and local businesses such as 14 day payment terms and ANZ Leasing Facility |
| Government and regulators
| · Regular, ongoing engagement with Government and regulators at Federal, State and Local levels · Public information including financial results and development of community reports · Signatory to the Tax Transparency Code of Australia 2016 · Detailed annual compliance reporting · Contributing to government/regulator policy development including on modern slavery · Providing site visit opportunities |
| Pastoralists
| · Dedicated pastoral access team · Formal agreements · On ground mitigation of impacts · Ongoing, informal and formal consultation with individual pastoralists · Minimise and offset impacts on pastoral operations |
| Educational institutions
| · Development and implementation of multiple programmes including high school scholarships, cadetships and school and work based traineeships, Fortescue’s Trade Up and University Graduate Programme · Involvement in local career expos such as AMMA Resources Connect · Site visits and work placement opportunities · Operational funding for Hedland Senior High School Trade Training Centre · Engagement with universities across Australia to encourage graduates to join the Fortescue family · Australia China University partnership |
| Non-government organisations
| · Involvement in UNGC and other industry forums · Continued inclusive engagement and consultation · Partnerships in delivery of services and supporting programmes · Development of corporate policies · Reporting, ASX announcements and media releases · External Stakeholder Grievance Procedure · Maintenance of strong environment and community teams |
| General community
| · Regular communication and consultation including specific forums on social and environmental impact mitigation and management for new developments · Targeted and tailored business development meetings · Fortescue hosted business and employment exhibitions and events · Local content procurement targets · Dedicated community office and community engagement team · External Stakeholder Grievance Procedure · Continued support for community programmes and events |
What actions were taken by Fortescue to promote ethical business behaviour?
In its FY18 Corporate Social Responsibility Report Fortescue reports that it took the following actions for promoting ethical business behaviour:
- Implementing a Code of Conduct and Integrity
- Fortescue operates under a Code of Conduct and Integrity, which reflects the company’s Values and represents its commitment to uphold the highest ethical business practices. The Code applies to Fortescue’s directors, employees, contractors, suppliers and business partners, its subsidiaries and related companies over which it has control and defines Fortescue’s commitment to achieving and maintaining its reputation as an employer of choice, an ethical business partner and a good corporate citizen. It reflects the policies which govern Fortescue’s business activities, including:
- Health and Safety Policy
- Procurement Policy
- Diversity Policy
- Anti-Bribery and Corruption Policy
- Human Rights Policy
- Equal Opportunity, Harassment and Bullying Policy
- Securities Trading and Continuous Disclosure and Market Communications Policies
- Appropriate Use of Information Technology Policy
- All employees and contractors must make sure they are familiar with the Code, which is accessible both in printed and electronic formats on Fortescue’s website and intranet. Training is provided to reinforce information contained in the Code and Fortescue employees are subject to Performance Assessments every six months, where adherence to the Code of Conduct and Integrity is assessed and reported. Remuneration is linked to these assessments.
- Applying a Whistleblower system
- Fortescue’s Whistleblower system, accessed by an online portal, phone or email, provides an independent, anonymous and confidential mechanism for anyone to raise concerns regarding potential illegal activity or breaches of Fortescue’s Code of Conduct and Integrity. During FY18, 13 Whistleblower disclosures were reported either in person or through Fortescue’s Whistleblower system. Every incident was investigated by Fortescue’s Corporate Governance Manager with assistance, where required, from Fortescue’s Employee Relations Manager. A number of these investigations resulted in corrective actions including warnings and, in some cases, termination.
- Implementing an anti-bribery and corruption compliance programme
- Fortescue has a zero-tolerance approach to bribery and corruption and has a specialist Corporate Governance Manager to oversee compliance with anti-bribery and corruption laws. Employees who are found to have breached anti-bribery and corruption laws are subject to disciplinary action which may include termination. Fortescue’s anti-bribery and corruption compliance programme includes:
- Participation in voluntary anti-corruption initiatives, including the Corporate Business Integrity Council
- Fraud and corruption risk assessments that consider the potential fraud, bribery and corruption risks associated with the business, third-party partners and geographic locations in which Fortescue operates
- A commitment to sourcing from suppliers that adhere to Fortescue’s standards, including the Human Rights Policy, Code of Conduct and Integrity and Procurement Policy
- Prohibition of the giving and receiving of gifts in connection with Fortescue’s operations which go beyond common courtesies associated with general commercial practice
- A number of channels for employees and third parties to anonymously report suspected or actual misconduct or violations of Company policy, including the Whistleblower reporting system (where complaints can be lodged via phone, email or through a web-based portal)
- In FY18, there were no violations of anti-bribery and corruption laws detected within or in connection to Fortescue.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standard addressed in this case is: Disclosure 205-3 Confirmed incidents of corruption and actions taken
Disclosure 205-3 Confirmed incidents of corruption and actions taken corresponds to:
- Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
- Business theme: Anti-corruption
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References:
1) This case study is based on published information by Fortescue, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:
http://database.globalreporting.org/
2) https://www.globalreporting.org/standards/gri-standards-download-center/
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