Business ethics and anti-corruption practices, transparency in payments to governments, and public policy practices.
of non-union, non-hourly employees completed Code of Ethics certification through a web-based compliance and ethics training program to refresh and enhance awareness of the Code of Ethics, including issues such as insider trading, conflicts of interest and harassment.
We are committed to upholding high moral and ethical principles as affirmed in our Code of Ethics. While Teck’s business practices must be consistent with the business and social practices of the communities in which we operate, we believe that honesty is the essential standard of integrity in any locale. Thus, though local customs may vary, Teck’s activities are based on honesty, integrity and respect.
We conduct our business in an honest and ethical manner. We expect our employees to deal with everyone in a fair and open manner and to conform with the spirit and intent, as well as the technical requirements, of all contracts that we enter into as well as with all laws, regulations and rules that govern us. Our approach to business ethics is guided by our Code of Ethics, which is implemented through our Doing What’s Right program, supported by our anti-corruption policy and practices, and has provisions for conflicts of interest. We maintain and implement a tax policy and disclose our engagement in public policy.
Doing What’s Right, our program designed to maintain an ethical workplace, is overseen by our Senior Vice President, Commercial and Legal Affairs. To assist employees in this regard, we have a Code of Ethics available in English, Spanish, Chinese and Turkish for our employees and contractors located at our operations, sites and offices worldwide. This code affirms Teck’s commitment to uphold high moral and ethical principles and specifies the basic norms and behaviours for those conducting business on our behalf. Our Doing What’s Right program is supported by additional ethics-related policies and procedures, including:
All non-union, non-hourly employees are required annually to certify compliance with our Code of Ethics and to report any potential infractions. Biannually, these employees undergo a web-based compliance and ethics training program to refresh and enhance awareness of the Code of Ethics, including issues such as insider trading, conflicts of interest and harassment.
Our employees are required to report any violations, or potential violations, of our Code of Ethics through our Doing What’s Right program, which includes a whistle-blower hotline and web portal that are managed by a third party. The hotline and portal are available 24 hours a day, seven days a week, in all jurisdictions in which we have employees, to provide a confidential and secure means for our employees to report concerns about conduct that may be contrary to our values and standards. We do not tolerate any form of retaliation against employees raising concerns. All allegations of harassment or intimidation by others as a result of contacting the hotline/web portal are investigated and, if required, appropriate disciplinary action is taken, which can include dismissal.
We engage in and support the work being done to fight corruption by supporting international frameworks such as the United Nations Global Compact (UNGC) and the Extractive Industries Transparency Initiative (EITI). We participate in the EITI through our ICMM membership; more information can be found in the Sustainability Governance section. Our Code of Ethics requires that we conduct global business in a moral and ethical manner, and that employees comply with all applicable laws. Under our anti-corruption compliance policy, available in English and Spanish with additional overviews available in Chinese and Turkish, payments, charitable donations, travel expenses, gifts and entertainment may not be made to government officials to assist us in obtaining or retaining business, nor can employees provide payments, gifts or entertainment that are prohibited by applicable country or local laws.
The following high-risk factors are considered as part of our anti-corruption compliance program, along with a number of other medium- and low-risk activities:
All charitable donations, sponsorships and community investments must comply with Teck’s Anti-Corruption Policy and follow Teck’s charitable donations and community investment guidelines, which prohibit donations that would improperly benefit a government official. Compliance with the Anti-Corruption Policy is subject to periodic review by internal audit.
Our Indigenous Participation Funding Guidelines provide guidance on payments made to Indigenous Peoples for participating in Teck-related activities. It is not illegal for a company to provide these types of payments to Indigenous Peoples so long as (i) the provision of the payments is not made corruptly to assist the Company in obtaining or retaining business, and (ii) the provision of the payments is not prohibited by the applicable country or local laws.
We provide anti-corruption training to employees who may be exposed to corruption risks due to the nature of their work. For example, employees who work with government officials or who could potentially have contact with government officials are required to complete an anti-corruption training program. Employee anti-corruption training is conducted at least every two years. Third-party service providers, agents and consultants who represent Teck to government officials are asked to complete our Third-Party Anti-Corruption questionnaire and, in some instances, to complete our training.
Third-Party Due Diligence Program
In 2014, Teck began to implement its third-party due diligence program under the Company’s Anti-Corruption Policy. Under the Policy, consultants, agents or intermediaries who have contact with, deal with, or do business with a government official on behalf of Teck must undergo sufficient due diligence to enable Teck to conclude with reasonable assurance that the service providers understand and will fully abide by applicable Anti-Corruption Laws and this Policy. The program was designed to only include service providers who present the highest risk to Teck of a potential corruption violation. Under Teck’s risk analysis, service providers who have contact with or have the potential to have contact with government officials on Teck’s behalf should be included in Teck’s due diligence program.
In 2015, there were 584 service providers in the third-party due diligence system which includes 511 approved service providers, 22 pending registration, four pending approval, five pending screening and 42 in a declined status – we do not do business with those in a declined status. Of 584 service providers, 71 completed additional anti-corruption training as required.
Figure 27: Due Diligence Process
Our Code of Ethics contains provisions regarding conflicts of interests for employees. As a Canadian company, we are subject to the Canada Business Corporations Act. As such, directors of the Board are required to disclose a material interest in any transaction or opportunity that the company is considering. To ensure the exercise of independent judgment, directors who have disclosed such an interest are prohibited from participating in the Board discussion or voting on the transaction.
Our approach to taxation is aligned with our Code of Ethics and our approach to business and sustainability. We are, in all tax matters, compliant, transparent, cooperative and ethical. We disclose our taxes accrued and paid in our published financial results in accordance with applicable accounting standards and supplement this with additional voluntary disclosure, working to ensure that our disclosure is accessible, practical and reported in a way that is easily understood.
We believe that transparency can help communities to understand the revenue generated by mining activity and how this is distributed to government for local economic and social development.
A growing number of companies, including Teck, have joined the Extractive Industries Transparency Initiative (EITI), which is a voluntary global initiative that promotes transparency in payments to government and revenues for extractive industries. We voluntarily provide information on our tax payments in our principal operating countries on a country-by-country basis in our sustainability report and have done so since 2011. Our payments to governments will also be reported to the Canadian government by country and on a project-by-project basis starting in 2017 as required under the Extractive Sector Transparency Measures Act.
Our approach to tax is guided by the following principles:
1. We act in accordance with all applicable laws and are guided by relevant international standards such as the OECD guidelines. We aim to comply with the spirit as well as the letter of the law.
2. We are transparent about our approach to taxation and we regularly report on our tax payments and taxes accrued.
3. We believe in paying taxes on profits according to where value is created over the course of the mining lifecycle. We conduct transactions on an arm’s length basis and comply with regulations under transfer pricing rules in the jurisdictions where we operate.
4. We do not take an aggressive approach to tax planning or avoidance. We do not implement transactions or tax structures that are unrelated to the ordinary course of our business. Our goal is to support the growth and development of our business in a way that reflects our legal obligations as well as our values and our commitments to our communities of interest.
5. We do not use “secrecy” jurisdictions. We respond openly and fully on a timely basis to all government requests for information pertaining to our legal structure in the course of their audits.
6. We seek to build open and transparent relationships with tax authorities and governments in all jurisdictions in which we operate. We support the development of tax policy in ways that reflect international best practices.
7. We have mechanisms in place, including a written internal tax policy, to achieve the above principles and our Tax Group reports to Teck’s board of directors on an annual basis.
Recently, the OECD has expressed increased concern regarding the use of “tax havens” by multinational companies. We have a limited presence in offshore financial centres, including a financing affiliate that finances operations outside of Canada and an insurance affiliate that insures our worldwide mining operations. Our activities in these jurisdictions are fully disclosed to all relevant tax authorities in accordance with applicable law and are conducted on arm’s length terms in accordance with applicable transfer pricing regulations. We do not conduct sales activities through these jurisdictions.
Teck focuses on being a collaborative, solutions-based partner with governments in the jurisdictions we work in. We take a systematic approach to monitoring and identifying political, legislative and regulatory developments in order to identify public policy opportunities and risks in areas pertaining to our business.
Our Government Affairs team guides Teck’s approach to public policy and engages government directly through a variety of means, including written advocacy letters and submissions, roundtable meetings, and one-on-one meetings. Teck also engages with government indirectly through our business and industry associations. We report on our advocacy efforts in an open and transparent manner, conforming to all lobbying laws, including publicly reporting our activities via applicable lobbyist registries in jurisdictions where we undertake advocacy efforts. We regularly update corporate and site-based employees who interact with governments on our compliance requirements.
Teck regularly evaluates the effectiveness of our public policy engagement by identifying where our advocacy has resulted in outcomes that support our business objectives. For example, successful outcomes include but are not limited to results that:
We report on alleged violations against our Code of Ethics, public policy initiatives and political contributions in the section below.
All non-union, non-hourly employees completed Code of Ethics certification through a web-based compliance and ethics training program to refresh and enhance awareness of the Code of Ethics, including issues such as insider trading, conflicts of interest and harassment. We received 20 reports of alleged violations to our Code of Ethics in 2015. The majority of these (30%) related to employee relations issues, followed by a range of other matters, including allegations of time theft (employee abuse of paid company time) and substance abuse. By the end of 2015, all 20 reports were closed following investigation, of which eight resulted in management action, such as discipline or amendments to practices or policies. No criminal cases regarding bribery were brought against Teck or any of its affiliates.
Annually, our Internal Audit department evaluates the effectiveness of our system of internal control over financial reporting (ICFR). This includes a consideration of the company’s vulnerability to fraud, as well as an evaluation of the design and operating effectiveness of those internal controls intended to prevent and/or detect fraudulent activities at a significant level. No deficiencies in ICFR were identified in 2015. The Internal Audit department also reports to the Audit Committee on a quarterly basis on any frauds identified, other than those reported through the whistle-blower hotline; no such frauds were identified during 2015. Furthermore, all operations and business activities are assessed for risks related to corruption, and internal audits are conducted on a periodic basis to assess compliance with the Anti-Corruption Policy.
We disclosed $255 million in tax royalties and other payments to government in 2015.
Significant Tax Issues – Responding to Severe Tax Hike in Alaska
For over 25 years, Teck’s Red Dog Operations has provided annual contributions to the Northwest Arctic Borough (NAB) – a local municipality – under a negotiated Payment in Lieu of Taxes (PILT) agreement. However, as of January 1, 2016, in place of a negotiated PILT, the NAB has instead levied a substantial severance tax. The new tax falls solely on Teck Red Dog Operations and, if legal, would increase annual payments to the municipality from approximately US$11.5 million under the prior agreement to an estimated US$30 – 40 million, depending on zinc prices. This would be over seven times greater than the next-highest municipal tax paid by a comparable mine in Alaska.
Teck Alaska has filed a complaint in the Superior Court for the State of Alaska seeking to enjoin the enforcement of a new severance tax on the grounds that the municipality lacks the authority to tax interstate commerce, that the tax violates Teck Alaska’s equal protection and due process rights, and that the imposition of the tax breaches a prior negotiated agreement between Teck Alaska and the municipality. That complaint is currently before the courts.
Filing a legal complaint was not an action we wanted to take. It is our hope that the NAB will instead agree to enter into good faith negotiations to collaboratively establish a new, reasonable PILT agreement that is supportive of both the region and the long-term sustainability of Red Dog Operations.
In 2015, we continued to support the development and enhancement of regulatory frameworks that are science-based, well-designed and contribute effectively to environmental protection while supporting sustainable economic development. Regulatory issues we conducted advocacy on in 2015 included:
In 2015, we continued to advocate for government actions that support the competitiveness of the resource sector in jurisdictions where we operate in response to sustained challenging market conditions. Our efforts included:
In 2015, we continued to advocate for government support for programs for Indigenous Peoples in the areas of human resources, skills development and training. For example, we continue to support the creation of a new iteration of the BC Aboriginal Mine Training Association with the Mining Association of British Columbia and Association of Mineral Exploration in British Columbia.
Indigenous engagement and programs have been a key focus of our activities in Chile in 2015. For example, we participated with other mining companies in the Indigenous Leading Council of the Indigenous development area of the Jiwasa Oraje peoples in the Tarapacá region. In 2016, Teck will serve as the primary representative from the mining sector.
From time to time, we make political contributions in the Canadian provinces in which we operate. All contributions are made in accordance with applicable laws. We do not make political contributions outside of Canada. In 2015, our contributions totalled $43,380:
BC Liberal Party
BC New Democratic Party
Alberta Progressive Conservative Party
Teck remains committed to upholding high moral and ethical principles as affirmed in our Code of Ethics. In 2016, we will continue to implement our Doing What’s Right and anti-corruption programs and engage in public policy initiatives. Furthermore, we will continue to ensure we are compliant, transparent, cooperative and ethical in all tax matters and meet reporting requirements under the Canadian Extractive Sector Transparency Measures Act.