Fair Pay & Worker Respect
50
As a large-scale industrial mining and chemical manufacturing firm, SQM is subject to standard labor regulations and workplace safety requirements, but its core business model does not inherently advance or harm fair pay and worker respect practices, which are determined by company policy and operational conduct. SQM demonstrates strong performance in worker respect and fair pay, supported by detailed 2023 and 2024 sustainability reports.
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Labor Relations & Stability: The company shows exceptional collective bargaining coverage, with 91.9% to 94.8% of workers covered by agreements and approximately 78% unionization.
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Workforce stability is high, with a voluntary turnover rate of only 3% and 94-97% of employees on indefinite (permanent) contracts.
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Compensation & Benefits: SQM makes a public commitment to living wages for employees and contractors.
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While it lacks a formal plan to close gender pay gaps, reported median pay equity ratios for most operational and administrative roles range between 0.82 and 1.04, though senior management gaps are wider (0.70).
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The company provides comprehensive benefits, including life, complementary health, catastrophic, and dental insurance, alongside unlimited telemedicine for employees and dependents.
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Safety & Engagement: The company maintains a leading safety record with a Total Recordable Incident Rate (TRIR) of 0.15 to 0.42 per 200,000 hours, significantly below industry norms.
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However, one fatality was reported in 2024.
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Worker engagement is high, with an 87-88% favorability score in recent surveys.
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Compliance: The score is tempered by minor labor violations.
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In 2023 and 2024, the company faced several administrative fines from the Labor Directorate and multiple lawsuits regarding the 'Protection of Fundamental Rights,' many of which were settled.
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While harassment complaints increased, the company maintains active investigation and remediation protocols.
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Fair Trade & Ethical Sourcing
0
As a large-scale mining and chemical extraction company, SQM operates in a sector with high risks regarding supply chain transparency and community relations, but its core business of mineral extraction is not inherently exploitative or fair-trade oriented by definition. SQM demonstrates a structured approach to ethical sourcing, particularly in its lithium operations. Regarding traceability, the company utilizes platforms like Zyght and SINADER to track hazardous materials and waste.
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Most notably, evidence indicates that 100% of third parties undergo corruption due diligence, and the company has mapped 100% of its 'significant' Tier-1 suppliers (representing 30% of spend) through its ESG program.
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This high level of visibility for critical segments supports a tier of 80. Ethical clause coverage is robust; 100% of new third-party intermediaries in 2023 adhered to the Business Partner Code of Conduct, and specific ethics and compliance clauses are mandatory in contracts, justifying a tier of 60.
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Forced and child labor incidents have remained at zero for at least 5 years according to reported data (2023 and 2024 reports), supported by a strict policy requiring all employees and contractor staff to be over 18.
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Remediation speed is moderate; while harassment complaints have a 30-day investigation window, broader ethics complaints (Ethicspoint) saw a 73% resolution rate within the calendar year, with the remainder taking up to six months (first semester of the following year).
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This aligns with a 30-45 day median resolution (Tier -20). Supplier diversity spend is focused on local regions (Tarapacá and Antofagasta). In 2023, spend in Antofagasta was 14.9% and Tarapacá was 0.8%, totaling 15.7% directed to local community suppliers, matching Tier -10.
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Audit frequency is the weakest area; while internal committees meet quarterly, on-site audits for the broader supplier base are described as occurring 'every 3-4 years' or 'periodically' depending on the risk matrix, though some high-risk contractors face quarterly checks.
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Following the rule to pick the less extreme/representative tier, Tier -80 is selected for the general supply chain.
Honest & Fair Business
-10
While the core business is chemical manufacturing, SQM has a documented history of significant regulatory and legal challenges, including major political financing scandals and investigations into transparency, which negatively impact its standing regarding honest and fair business practices. SQM demonstrates a complex profile regarding 'Honest & Fair Business,' characterized by robust disclosure frameworks offset by significant historical and ongoing regulatory scrutiny.
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**Regulatory & Compliance:** The company is currently under an SEC subpoena (resumed in 2025) regarding potential FCPA violations, following a $30.5 million settlement in 2017.
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While 2024 fines were relatively minor (approx. $150k USD for environmental and administrative issues), the ongoing investigation and historical record cap the anti-corruption tier.
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**Financial Integrity:** In April 2024, SQM reported a material accounting reconciliation regarding mining taxes, resulting in a $1.1 billion adjustment to align local and U.S. reporting standards.
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This qualifies as a material restatement within the 5-year window.
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**Governance & Transparency:** SQM scores well in governance structure. 87.5% of the board is independent by NYSE standards (though only 25% by Chilean law), and the company maintains an external chair.
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Audit coverage is high, with 100% of plants covered by internal audits and external verification by PwC.
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Transparency is supported by real-time environmental monitoring portals and reporting to GRI, SASB, and CDP (B rating).
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**Ethics & Verification:** The whistleblower system (EthicsPoint) is managed by a third party, with documented investigations (37 reports in 2024, 6 substantiated) and a 30-day resolution target for harassment cases.
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Third-party verification is extensive, including IRMA 75 (the highest for a lithium company), Ecovadis Gold (94%), and ISO certifications (9001, 14001, 45001, 50001, 27001) verified by bodies like Deloitte and PwC.
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Kind to Animals
-30
SQM's large-scale extraction operations in the Salar de Atacama involve significant water usage and land disruption in a fragile ecosystem, which poses inherent risks to local wildlife habitats and biodiversity. SQM’s impact on the 'Kind to Animals' value is primarily characterized by the ecological consequences of its lithium extraction operations in the Salar de Atacama, balanced against a lack of direct animal testing. Regarding wildlife conservation, evidence indicates significant negative impacts on local biodiversity. Research published in 'Proceedings of the Royal Society B' and reported by Friends of the Earth links lithium mining in the Atacama to a 10–12% decrease in James’ and Andean flamingo populations due to habitat degradation and water scarcity.
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While SQM maintains a flagship conservation program for the Andean flamingo and uses deterrents/fencing to protect wildlife, the Superintendency of the Environment (SMA) has previously ordered urgent measures due to direct damage to local wildlife.
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The documented decline of vulnerable species in its primary area of operation warrants a -90 tier, as habitat degradation continues despite nominal conservation efforts.
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On animal testing, SQM states in its 2024 Sustainability Report that none of its products contain chemicals of concern requiring alternative product development or animal testing.
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Consequently, the company does not conduct in-house or contracted animal testing, leading to a tier of 0 for 'alt_testing_usage' and 'animal_testing_volume'.
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Its policy is categorized as a 10, as it effectively operates a no-testing model by virtue of its product portfolio, though it lacks a proactive global advocacy stance for industry-wide reform.
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Other KPIs such as cruelty-free certifications, humane operations, and animal agriculture ethics were omitted due to a lack of relevance to SQM’s core business as a chemical and mineral producer, or a lack of specific evidence in the provided articles.
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No War, No Weapons
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SQM's core business involves the extraction and processing of lithium, iodine, and fertilizers for civilian industrial, automotive, and agricultural use; it does not have a core business in arms manufacturing or military contracting. SQM (Sociedad Química y Minera de Chile) demonstrates a strong commitment to maintaining a business model free from arms and conflict-related activities, as evidenced by its 2023 Sustainability Report and internal policies.
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Regarding revenue, the company’s core business is focused on lithium, iodine, and specialty plant nutrients for civilian sectors (health, nutrition, renewable energy).
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There is no evidence of revenue from arms or defense contracts (revenue_arms_contracts: 0).
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The Board mandate explicitly excludes defense business through its Sustainability, Ethics, and Human Rights Policy, which is overseen by the Board and its specialized committees (board_oversight_defense: 10).
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SQM has established clear ethical red lines and conflict-related safeguards.
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The company explicitly prohibits the acquisition of controversial minerals (tantalum, tin, gold, tungsten) and verified through the Conflict Minerals Reporting Template that it does not source from the DRC or neighboring regions (conflict_minerals_percentage: 30).
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Furthermore, the company implemented procedures in 2022 to screen its supply chain against EU Conflict-Affected and High-Risk Areas (CAHRAs) lists, confirming 0% procurement from active conflict zones (conflict_zone_procurement_percentage: 10).
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Its policies explicitly state a zero-tolerance approach to financing armed groups and define war crimes or support for non-state armed groups as substantial breaches leading to contract termination (ethical_red_lines_compliance_rate: 10).
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The company is fully aligned with the UN Guiding Principles on Business and Human Rights (ungp_alignment: 10) and has undergone external audits (e.g., by Feller.Rate and IRMA) to verify compliance with arms control laws and human rights standards (zero_exposure_controversial_weapons: 10).
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While the company acknowledges lithium's potential dual-use nature in the broader industry, its own disclosures focus exclusively on civilian and technological development applications.
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Planet-Friendly Business
-30
While SQM's lithium production is essential for the energy transition, its core business model relies on large-scale mineral extraction in the fragile Atacama Desert ecosystem, which involves significant water consumption and potential long-term ecological disruption, creating a tension between its product's climate benefits and its operational environmental impact. SQM (Sociedad Química y Minera de Chile) demonstrates a complex environmental profile characterized by high transparency and ambitious targets alongside significant operational impacts in water-stressed regions. In 2024, the company reported total Scope 1, 2, and 3 emissions of approximately 1.92 million tCO2e, placing it in the -40 tier.
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While SQM has set a net-zero target for 2040 (and 2030 for lithium products), it is currently redefining these timelines.
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Its decarbonization targets are validated by SBTi, and the company maintains a published progress dashboard.
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Water management is a critical area; 100% of SQM's water withdrawal occurs in high or extremely high water-stress zones (Salar de Atacama), leading to a -100 score for basin stress.
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However, the company has met or exceeded reduction targets, reducing brine withdrawal by 32% since 2020 and implementing a US$1.5 billion 'Salar Futuro' project to further reduce freshwater use.
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Regarding compliance, while the company reported zero significant violations in 2024, it has a history of minor violations and ongoing administrative proceedings related to brine extraction, resulting in a -80 tier for compliance.
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Conversely, SQM shows leadership in transparency, with 87.47% of revenue aligned with EU Taxonomy 'new energy' categories and a high volume of Environmental Impact Assessments (over 70 authorized projects).
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Socially, SQM invests 1-2% of climate-related spending in adaptation and community programs, such as seawater pipelines for local drinking water and indigenous development funds, supporting its scores in climate justice and just transition categories.
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Respect for Cultures & Communities
-30
SQM's large-scale lithium and mineral extraction in the Salar de Atacama has faced significant, documented opposition from indigenous Lickanantay communities regarding water rights, environmental degradation, and the adequacy of FPIC processes, leading to ongoing legal and social conflicts. SQM’s performance regarding 'Respect for Cultures & Communities' is characterized by a significant tension between high-level corporate commitments/certifications and documented operational harms. On the negative side, the company has a history of substantiated water-rights conflicts and FPIC failures.
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In 2019, the First Environmental Court of Antofagasta upheld indigenous complaints regarding over-extraction of brine, finding SQM's compliance plans insufficient.
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In 2024, the DGA imposed fines (1,285 UTM) for non-compliance in water measurement systems.
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Regarding FPIC, the Chilean Supreme Court ruled in 2018 that a lease amendment was invalid due to lack of indigenous consultation.
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More recently, in January 2024, the Council of Atacameño Peoples organized road blockades and occupied plant access to protest a lack of FPIC in the Codelco-SQM memorandum, leading to a temporary operational halt.
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While SQM reports zero 'violations' in its 2024 sustainability report, these legal and community-led actions demonstrate a pattern of bypassing FPIC on major strategic shifts.
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Positively, SQM demonstrates robust revenue-sharing and local economic integration.
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Under CORFO agreements, the company contributed US$169 million in 2023 to regional governments and municipalities, with an additional US$10-15 million annually committed specifically to Atacama La Grande indigenous communities.
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Its lithium operations achieved an IRMA 75 rating in 2023, the highest for the sector, though NGOs have questioned the audit's community inclusion.
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Local hiring is strong, with 59% of the workforce in the Antofagasta region being local residents.
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Grievance resolution is functional but shows typical industry performance, resolving 73% of 184 consolidated complaints in 2023.
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No community displacement incidents were documented, and the company has initiated archaeological protection protocols for new projects, though community leaders note that water scarcity continues to threaten traditional agricultural livelihoods.
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Safe & Smart Tech
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As a chemical and mineral extraction company, SQM's core business does not involve software, AI, or data-driven services, making the value of Safe & Smart Tech neutral to its operations. SQM demonstrates a solid baseline for cybersecurity and data privacy, particularly within its Lithium division. Regarding **data_breach_severity**, the company reported zero information security incidents or data leaks during 2024.
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This supports a tier of 20, reflecting a clean three-year record based on available sustainability reporting. For **privacy_certifications**, SQM has achieved ISO 27001:2022 (Information Security Management System) for its Lithium division and TISAX® certification (Information Security Assessment for the automotive sector) as of August 2023.
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It is also expanding these certifications to other departments like Corporate Finance and Iodine.
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This warrants a tier of 20 for comprehensive, advanced standards. In **security_training_effectiveness**, the company reported that 1,122 people participated in information security training in 2024.
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While it mentions a "Cybersecurity Cultural Plan" including ethical phishing campaigns, it does not provide specific outcome metrics like click rates, placing it at tier 10 for measured effectiveness without detailed behavioral data.
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**Vulnerability_management** is scored at 0 (industry standard). While the company conducts internal and external penetration testing and vulnerability management,
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it does not disclose specific remediation timeframes (e.g., patching within X days) required for higher tiers. Finally, **regulatory_compliance** is tiered at 10. SQM explicitly states compliance with the EU’s GDPR and similar local regulations.
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It also maintains a Crime Prevention Model certified under Chilean Law No. 20,393 and adheres to FCPA standards following the conclusion of a 2017 DPA.
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No recent privacy-related regulatory actions were found in the provided evidence.
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Zero Waste & Sustainable Products
-30
While lithium is essential for the energy transition, the extraction process involves massive brine evaporation and mineral mining, which are inherently resource-intensive and generate significant waste byproducts, contrasting with circular economy principles. SQM demonstrates a developing waste management framework with clear quantitative targets and active reporting, though current diversion rates remain low. **Waste Management & Diversion:** In 2023, the company reported a waste diversion rate of approximately 2%, with 98% of hazardous and industrial waste sent for final disposal.
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By 2024, the Lithium division improved its recovery rate to 15.8%, while the company-wide recycling rate for hazardous and non-hazardous industrial waste reached 15%.
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These figures place the company in the -70 tier for diversion. Hazardous waste is managed according to national legislation (SIDREP), with active reduction initiatives such as the Solutions Recovery Plant (PRS) for water and mineral recovery, supporting a -60 tier.
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**Targets & Initiatives:** SQM has established company-wide targets to reduce waste by 50% by 2025 and 65% by 2040.
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It has implemented over 10 distinct initiatives, including the 'ReciPampa' program, e-waste management at Nueva Victoria (1,170 kg), and the 'Kyklos' center for corporate offices.
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Single-use plastic reduction efforts are documented (e.g., avoiding 13kg of plastic in a 6-week test), but represent token reductions (<5%) relative to total industrial waste volumes.
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**Circular Economy & Supply Chain:** The company is integrating circularity through iodine recycling (16% of supply) and researching battery recycling.
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Supplier requirements are established through a Responsible Sourcing Policy and Sustainability Self-Assessments (77 suppliers in 2024).
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Customer education is provided via 4,500+ Safety Data Sheets and GHS-compliant labeling.
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**Compliance:** SQM maintains exemplary compliance with no significant environmental penalties (>US$10,000) in the past four years, though minor labeling discrepancies were noted in California and Ukraine.
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