Learning by Doing

This is Inco’s first Corporate Social Responsibility Report. However, the underlying values, principles and behaviour embodied in social responsibility have been an evolving part of who we are and how we have conducted our business for over a century.

Like many corporations, we are following a path of continuous improvement, learning by doing, and expanding our understanding of the social and cultural dimensions of our business. During our more than 100 years of operation, we have tried to be a positive force in the communities where we operate while also bringing the benefits of nickel to the world. Along the way, we have acknowledged our mistakes, and in some areas we have behaved in ways that fall short of today's higher standards of business practice. We continue to devote our energies to solving environmental challenges like further reducing sulphur dioxide emissions in Sudbury, Ontario and addressing our historic legacies in Sudbury, Port Colborne and elsewhere. These are reported on in detail in our Environmental, Health and Safety Reports. But it's also fair to recognize that many of our initiatives, such as community building, have set standards for socially responsible behaviour in our industry.

For example, the section of this report on our PT Inco operation in Indonesia illustrates what we believe is a model of community development and partnership that was initiated over 30 years ago. The PT Inco model exemplifies a core value for us that is more recently exhibited in the relationship we have established with aboriginal people in Labrador and the consultations for a Good Neighbour Agreement we have initiated with the indigenous people of New Caledonia in the South Pacific, the site of our most recent mining development. Respect for traditions and cultural heritage form the foundation of our approach.

We take pride in the leadership we have demonstrated with community building. Nowhere is that pride more justified than at our flagship operation in Sudbury, where multiple generations of employees still reside in an economically and socially diverse community. But let's be frank: from a corporate perspective, we must be and we are motivated by good business practice as much as we are by altruism. It makes good business sense to foster positive relationships with communities and it is the right thing to do. As a steward of the resources we have, we must and we will earn our social licence to operate. To be successful in our business, our contribution must extend, and be seen to extend, beyond the bottom line.

Sometimes that means accepting the social imperative over the economic, as was the case with our recent decision in New Caledonia to dispose of tailings on land rather than by marine methods, even though marine disposal is less expensive and is seen by experts as being scientifically acceptable. There are other examples cited in this report, but the fundamental principle involves finding a balance between the social, economic and environmental responsibilities that face us.

There is much more to social responsibility than community building. At all times, in every sector of our operations, our behaviour must be ethical and our integrity above reproach. We maintain written standards by which we conduct our business, and insist on a review and accountability process that carries to our Board of Directors. Our ethical standards will not be compromised. Zero tolerance is applied to bribery, corruption and conflicts of interest.

Inco supports the principles embodied in the Universal Declaration on Human Rights. We subscribe to and live by the Canadian Charter of Rights and Freedoms. Our practices respect the principles of workplace equality and fair labour. We believe in freedom of association. Where and when appropriate, such as in Indonesia, we have employed a “living wage” practice that applies standards of human need rather than standards of minimum wage to our compensation package.

We believe our employees should be treated with dignity and respect. Employees should have the opportunity to achieve their personal and professional goals while meeting company objectives.

Most important, we believe our employees have a right to a safe workplace. High standards for employee health and safety are at the forefront of how we operate, and they take precedence above all else.

From our perspective the question has never been whether to mine nickel, but how. How to mine and process it safely and responsibly? How to assure that it remains beneficial both to the communities that produce it and to the consumers that use it?

We believe that our responsibility extends beyond the bounds of our own people and operations. We understand our responsibility for product stewardship, whether in the quality we provide to our direct customers or in the impact our product has on the end user. We support and publish nickel industry research into the human health and environmental effects of nickel and work with government agencies to develop guidelines for safe use.

The products we make have one of the highest recycling rates of any large-scale industrial commodity. Nearly half of all the nickel consumed annually in the world is recycled from scrap. We further contribute to recycling by operating North America’s only nickel-cadmium battery recycling facility.

Nickel makes a valuable contribution to society. About 90 per cent of world nickel production goes into approximately 3,000 nickel-containing alloys, the majority of which are stainless steels. These alloys are used in over 250,000 applications such as transport, industrial, construction/architectural, commercial and consumer items. Nickel is the key alloying element in most stainless steels, making them especially corrosion resistant at high temperatures. This means that they make an extraordinary contribution to medical instruments and hygiene. Millions of kitchen sinks contain nickel. It's also found in the batteries of hybrid-electric cars, thus helping to reduce automotive fuel emissions to the environment. It is vital in the manufacture of countless high-tech components. It is fundamental to society and we are proud of what we are making.

The applications of nickel for advancing human progress are extensive and impressive, but we do not rest on such laurels. Through our industry-leading research and development initiatives we are continually seeking process and product improvements. As with so many other aspects of our business, research is a long-term investment in sustainability.

This report represents the third pillar in our public disclosure initiatives. Whether financial, environmental or now social, our conduct has never been more transparent. This report, like the others such as our Environmental, Health and Safety reports, reveals our shortcomings and challenges as well as our successes and achievements.

On the social front, there are ongoing challenges.

Going into 2003, we believed that we had made good progress in the collaborative process with our labour unions at our Canadian operations. It was disappointing when we then experienced a three-month strike at our Ontario operations. We need to find a better way to work with our unions to avoid these disruptions to our business, our customers and communities in the future.

We are also focused on trying to improve the gender diversity of our workforce, which, while not unique in our sector, falls short of our expectations today. We are working to address those issues through innovative workplace initiatives that are giving women the experience needed to take on more diverse roles across our company.

Meanwhile at our Goro project in New Caledonia, while we are making progress, work remains to be done to reach a satisfactory agreement ensuring that local indigenous communities benefit from the project. We’re confident that our experience working with the communities of northern Labrador and Central and South Sulawesi in Indonesia will help us reach an agreement at Goro that works for everyone. We know the way, and we will get there.

We are addressing our legacy issues, researching new applications for technology, consulting with our stakeholders to address the broad needs of our community and, never to be overlooked, keeping our attention on the economic expectations of our many investors. We are unequivocal: we embrace the free enterprise system and we openly declare that we are in business to make a profit. And we are proud of what we produce and the contribution our products make to society and to the improvement of people's lives across the world.

For Inco, the challenge of balance is constant. Our drive for improvement is continuous. Our focus on all of the dimensions of sustainable development is reinforced with a century of experience and achievement.

This report is a window on who we are, how we are progressing and, most important, what we value as a company of more than 10,000 people, who bring individual integrity to their jobs every day. They are values that inform our decisions and guide our actions. We invite, in fact encourage, your feedback and observations on how we are doing.

Scott Hand
Chairman and CEO