Codelco’s covenant of trust


Codelco’s covenant of trust Ethical BoardroomBy Oscar Landerretche – Chairman of the Board of Codelco




Due to its impact and importance at both the national and international level, its importance for the development and global prestige of Chile, its financial and fiscal importance, its size in the copper market, and its general influence, Codelco – the world’s largest producer of copper – must always be adopting and implementing the best corporate practices available.

Under this imperative, the company’s board, senior management and community of employees are committed to a steady path of excellence – giving the highest priority to continually implementing incremental standards of transparency, corruption control, limitations to lobby and conflict of interest firewalls.

We believe that ‘getting it right’ not only implies rigorous strategic planning, high-quality engineering, sustainable operations and credible mining plans; nor is it merely a question of cutting operational costs and increasing productivity. It is not enough to design investment agendas that are efficient, cost-effective or that meet deadlines and budgets; nor are the introduction of technologies and the adoption of high socio-environmental management standards sufficient. All this is of the utmost importance, but it is not enough if it is not accompanied by other essential elements: a professional corporate governance, an ethical management of our resources, and the construction and development of a corporate culture in which transparency, equal opportunities and good practices are central.

Security changes

All of this has been achieved over the last few decades, but Chilean mining, including Codelco, has undergone another transformation in that period too, – in respect of operational security. The innovation of processes and procedures carried out in the struggle for this objective has been dramatic, involving, in many cases, a paradigm shift in operational culture. The results have been exceptional and both Codelco and Chilean mining today show safety indicators that rival and even surpass mining operations in developed countries. This process involved changes in rules and processes, regulations and practices, customs and procedures, but would have failed if not accompanied by a policy aimed at generating a cultural change within the corporation. This policy is expressed in a series of rituals that are practiced every day at Codelco and serve to signal the importance it has for our company. What this board and this administration has sought is to generate a similar change: operational and cultural, institutional and human, in the areas of transparency, equal opportunities and good practices.

Codelco’s covenant of trust Ethical Boardroom

Codelco’s covenant of trust Ethical BoardroomCodelco is a state-owned company, owned by all Chileans. The way in which the company is managed and the way in which it communicates, explains, controls, audits and evaluates itself must assure all the citizens of our country that the work is done in defence of their interests and values. The guarantee that the decisions that are made by the company are always made exclusively privileging the interest of the country and that resources are not diverted, altered or modified by special interests. Our goal is to sustain this conviction amongst our citizens.

Commitment to getting it right

Codelco must reflect, both internally and externally, that it works within a modern, professional and auditable management framework. We must radiate inward that our company is committed to raising its standards of good corporate governance, probity, management control and transparency. And that is why we will continue to promote policies, but mainly good practices, that inspire us to act with professional and ethical rigour in all instances and at all levels of the corporation.

At the same time, we will continue to move towards more transparency and more accessibility to our information and data. It is no longer enough for companies to declare their good intentions; today’s citizens require concrete facts and measurable results. That is why we have promoted and generated a policy and culture of greater transparency, which commits the company to publish and disseminate data, indicators, documents and archives of public interest, in a proactive, voluntary, updated, accessible and understandable way that goes beyond what is required by law. It is, however, important to understand that there are legal and commercial limits that protect the confidentiality of certain contracts. Therefore, the commitment to transparency is limited only by commercial privacy of business counterparts and respect for the personal privacy of its workers. This balance is critical so that the culture of transparency is sustainable in the long term and not a transitory flare.

Codelco’s covenant of trust Ethical BoardroomCodelco is a company with a leadership role in Chile. That is why our company has self-imposed standards that reflect the kind of country that all citizens want to build, even if it means going beyond the rules and regulations established in current regulatory frameworks. At present, the citizens of our country, but also around the world, are demanding greater standards of transparency, probity and good practices from private businesses and public institutions, from companies and governments. Codelco is at the intersection where business and government, public and private, productive and social concerns converge. It’s a company with a leadership vocation placed on it by its history at said intersection and should anticipate these trends to help shape them.

The road started in recent years has no return. At Codelco we have driven a profound transformation. In this process, which covers the entire organisation, both from a functional perspective and from the perspective of personal responsibilities,  there are specific areas in which we encourage long-term changes of focus. Since the signing of Codelco’s 2009 Corporate Governance Law, the company has advanced at breakneck speed in fullfiling the objectives of that bill listed in the panel below chronologically.

As you can see, Codelco has achieved, under its current corporate governance, high standards of control in keeping with the principles of efficiency, efficacy, and probity. In many respects these standards are higher than those prevailing in the Chilean government and in most Chilean private companies. This shows that the 2009 reform was a tremendous breakthrough for the company, that has allowed Codelco  to quickly advance these standards.

It is true that in a large company, such as Codelco, with about 20,000 employees and with thousands of commercial transactions a year, there have been and probably will be people who will make errors and even, from time to time, those who will violate norms, regulations and standards, and even people who will attempt to betray public trust. However, thanks to the best practices and management standards that have been implemented in recent years, the occurrence of such events is significantly less likely, less probable and less frequent. This is what we can promise our citizens. This is our covenant. It is a critical one for our country.



About the Author:

Oscar Landerretche is the Chairman of Codelco’s Board of Directors, Chile’s mining SOE and the world’s largest copper mining company. He is also professor at the Economics and Business School of the University of Chile, were he teaches and conducts research in Macroeconomics, Labour Economics and Political Economy.

He studied economics and earned a BSc in the same subject at the University of Chile. Later he earned a Ph.D. in Economics from the Massachusetts Institute of Technology (MIT). He was Director of the School of Economics and Business at the University of Chile (2012-2014) and previously founding director of the Master in Public Policy at the aforementioned university (2004-2010). Oscar began his professional career as an economic analyst at the Central Bank of Chile. Later, he was the Chilean consultant for Global Source Partners, New York (2006-2011). He recently was a member of the Expert Committee on GDP Tendency and of the Financial Advisory Committee for the Chilean Ministry of Finance.

In 2005, he was the Executive Secretary during the primary stage of the Michelle Bachelet 2006 presidential campaign. He was also Executive Secretary of the Labour and Equality Presidential Advisory Council during the period 2007-2008. In 2009, he was Programme Coordinator for Eduardo Frei 2010 presidential campaign and was recently appoint Member of the APEC Business Advisory Council (ABAC).