

Freeport-McMoRan Copper & Gold, the US mining giant, faces further action over controversial mining operations in Indonesia from a coalition of institutional investors that received almost 33% of votes in support of their campaign at Freeport’s annual general meeting this summer. The coalition includes the Swedish national AP funds, APG Asset Management, which manages the assets of ABP, the Dutch civil service pension fund, the New York City Pension Fund and the United Methodist Church. Swedish fund AP2 said in its latest Annual Corporate Governance report that the investors had been “inspired” by the shareholder response to its action and that the high level of the vote meant they could automatically lodge the same resolution at next year’s Freeport AGM. The investors are lobbying Freeport to appoint an independent environmental expert to its board to examine poor environmental practices at its Grasberg mine in Papua, Indonesia.
Carl Rosen, former head of corporate governance at AP2 and now chairman of the International Corporate Governance Network (ICGN), said: “Thanks to the massive support, the Second AP fund and its colleagues can now pursue this issue further. It’s highly pleasing that we gained such massive support.” Sweden’s national AP pensions buffer funds have been trying togenerate a dialogue with Freeport for several years via their joint Ethical Council. Rosen said such resolutions normally attract support of 3-10% of the voting rights when first presented for consideration by the AGM. He added: “The tremendous amount of support shown has of course inspired us to continue to address these issues, both in this specific case, as well as in other companies, where we have identified shortcomings with respect to the environment, ethics and human rights. This demonstrates that many investors consider that environmental issues should be important to mining companies and that environmental expertise should be represented on the board.” The investors argue that Freeport’s environmental record is damaging shareholder value and had called on the company to: “respond to its environmental challenges in an effective, strategic and transparent manner in order to restore trust in the company and minimize the adverse environmental impact of its operations”.
At this year’s AGM, Freeport advised shareholders to vote against the proposal saying it believed its current selection process for directors was effective and that it was not in shareholders’ best interests to require a particular type of specialist on its board.