Analyzing BHP Billiton’s Corporate Social Responsibility Activities And Governance

Introdution

The company chosen for the analysis is BHP Billiton Limited. This company is under the list of top 100 Australian stock exchange listed companies and have its headquarters established in Melbourne, Australia. Being a world-leading resource company, its work includes processing minerals, oil and gas. Corporate social responsibility is done on voluntary basis by the companies because they are a part of the fabric of society. Activities are undertaken under corporate social responsibility to enable the company’s operation in the given economic, social and environmental parameters in a sustainable manner. A company cannot run in the long run, if it just cares for its own profit irrespective of the harm that is brought to the society in large.  There are several rules and regulations have been applied on the companies which require them to deliver the best possible benefits to societies at large (BHP Billiton Company, 2017).

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The objective of current report is to apply the analytical frameworks of corporate responsibility and ethics that include Carroll’s Pyramid and Wartick and Cochrane’s Typology to examine the company’s activities in line with the expectations of key stakeholder to identify the areas where the company lack in fulfilment of responsibilities. Proposals are also being set to lay down the recommendations which BHP Billiton can follow to achieve the goals of meeting stakeholders’ expectations. The main objective of the CSR activities of the BHP Billion Company is to mitigate the negative impact of its business on the society and deliver the best possible results for the betterment of the stakeholders (BHP Billiton Company, 2017).

Carroll’s Pyramid

Carrol’s pyramid tries to explain the way, in which organisations can meet their social responsibility requirements, using the shape of a pyramid.

This theory states that, the main objective of any organisation is to make profit. The legal (following laws and regulations), ethical (acting morally) and philanthropic (discretionary will to give back to society) requirements come after that. Organisations sometimes ignore the philanthropic requirements while following this model (Sharif, and Scandura, 2014).

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Wartick and Cochrane’s typology was based on Carrol’s pyramid model and also recognised economic element as the first in the series, but it didn’t exclude other responsibilities being ethical, legal and discretionary. It was based on the approach that there lies a distinction among the principals of corporate responsibility, the process of corporate social responsiveness and the management of social issues. This process not only strengthen the work process system of the BHP Billiton in the best interest of the society but also strengthen the corporate sustainability at large Although this model seemed great while study, but it cannot run in practical fields due lack of definitions regarding the elements (Zhu, May, and Avolio, 2014).

As per legitimacy theory of corporate social responsibility, every entity is entitled to perform in such a manner that appears legitimate to the society, so that its actions are acceptable to the public. The key stakeholders for BHP Billiton include business partners, employees and contractors, government, community-based communities, media, society partners, non-government organisations etc. For the corporate social actions, the stakeholders expected the following things:

  • Completion and achievement of targets set earlier when there was Samarco dam failure that included, rebuilding infrastructure like roads, bridges, schools etc., rescue and care programme for animals, resettlement of three communities namely Bento Rodrigues (236 families), Paracatu (142 families) and Gesteira (eight families), recovery of water quality, managing and using the land sustainably, restoration of forests (BHP Billiton Company, 2017).
  • Disclosure of reasons of Samarco dam failure in public environment
  • To enable sustainable processes even at other non-operated joint ventures
  • Managing safe workplace environment and pilot preparation of emergency situations
  • Maintaining diversity and inclusion in employment section, and framing policies for retention of talented and skilled employees (Bolman, and Deal, 2017).
  • Providing the employees with such working conditions that maintain their physical and mental health
  • Keeping the company’s operations well and safe when it comes to health impacts
  • Keeping disaster management done at hand that focuses on responses related to the physical impacts of change in climate
  • To protect the ozone layer and to prevent increase in greenhouse effect, managing the emission of greenhouse gases (BHP Billiton Company, 2017).
  • Investments to support and improve local and native communities
  • Proper weightage given to human rights (Brammer, and Pavelin, 2016).

Objective

From the information available from the latest sustainability report issued by the company, it’s evident that along with the summary of actions taken in light to maintain sustainability, there are mentioned futuristic statements also. BHP Billiton claims to set, met and exceed the targets for over 20 years. The targets set by BHP Billiton according to the expectations of stakeholders and the outcome are analysed as below (Gamu, and Dauvergne, 2018).

  • In order to ensure the safety of workers at workplace, several steps have been undertaken and that resulted in zero- work related fatalities except one that happened at Escondida asset  in Financial year 2017
  • There is seen a reduction of 76% in carcinogens and airborne contaminants exposure, which is an advanced step in safeguarding of workforce
  • Over US$ 80.1 million being around one per cent of pre-tax profits are invested in community programmes that benefitted the local and native communities (Andriof, and McIntosh, 2017).
  • For alignment of Voluntary Principles on Security and Human Rights, annual reviews are being conducted and gaps are identified. Improvement plans are being made.
  • Setting financial year 2006 as base, it was aimed to total greenhouse gas (GHG) emissions. In this line, 21% reduction is seen in emissions of greenhouse gases.
  • In order to improve the quality and volume of water, BHP Billiton implemented a minimum of one project, at all their assets that improve the management of water resources.
  • Placing land and biodiversity plans in place to reduce, rehabilitate and balance impacts to biodiversity (Ali, Frynas, and Mahmood, 2017).
  • With regards the Samarco dam failure, a number of samarco employees have been deployed for renovation of homes, rebuilding roads and schools etc. the three communities mentioned earlier are being recreated and reassembled after considering their views. Vegetation is grown, and tailings are re-contoured in order to reduce soil erosion. To investigate and find the real reason behind the dam failure, BHP Billiton engaged a New York-based law firm Cleary Gottlieb Steen & Hamilton LLP (Cleary Gottlieb). The findings and results of investigation set by the law firm can be seen by the public at com.
  • For a long term sustainable approach, company has framed its targets for the upcoming five years. This five-year plan also focuses on the above guidelines (Lanis, and Richardson, 2015).
  • These finding have shown that since last five years, BHP Billiton Company has increased the investment of its busienss in its CSR activities. However, the main latest case of BHP in Brazil had put the negative impact on the business of company and resulted to high amount of loss (Waller, and Lanis, 2009).

Although the company has achieved a lot of the consumer expectations. But still there is a long way to go. The samarco dam failure has added a black spot that cannot be erased until and unless the company functions in the light of activities that promote social welfare more that the company’s own profit making (BHP Billiton Company, 2017).

The company has tried to achieve all that it promised for, although many activities are not seen in the area of human rights. The company should focus on everything that’s pointed in BHP code of business ethics. Much emphasis is needed to be placed on the compliance of anti-corruption policies. There need to be a gender balance in company when it talks about inclusion and diversity in workforce. Employees should have continued to be served with mutual respect which motivates them to help the concern in achieving the company’s outcomes (Dias, et al. 2018).

Policies have been framed wherein managers are trained to analyse the employees that are encountering mental health issues and a mental wellness working group has also been established but the need of hour is to observe the success of implementation of same by monitoring the results. The results of community perception surveys, analysis of complaints and grievances, community incident analysis, research and benchmarking, consistent monitoring and evaluation, audit reports and findings should be continually monitored and compared with past years results so that the improvements and deficiencies can be found out. Growth plans and investment plans should be made keeping in mind the view of long term support from community and their growth (García?Meca, and Pucheta?Martínez, 2018).

Conclusion 

After analysing all the details and case study of the BHP Billiton, it could be inferred that CSR activities of the company plays pivotal role in the success of the organization. However, with the ramified economic growth and complex business, it has become cumbersome for the BHP Billiton Company to mitigate the negative impact of its busienss on the society. THE CSR program of the BHP Billiton has been used by company to render the best possible benefits to society and mitigate the negative impact of its business. There are several eco-systems, alignment of Voluntary Principles on Security and Human Rights, annual reviews are being conducted and gaps are identified. Improvement plans are being made to strengthen its CSR activities in long run.

References

Ali, W., Frynas, J.G. and Mahmood, Z., 2017. Determinants of corporate social responsibility (CSR) disclosure in developed and developing countries: a literature review. Corporate Social Responsibility and Environmental Management.

Andriof, J. and McIntosh, M., 2017. Corporate citizenship: rethinking business beyond corporate social responsibility. In Perspectives on Corporate Citizenship (pp. 53-65). Routledge.

BHP Billiton Company, 2017. Annual Report 2017. [Online] Available at:  https://www.bhp.com/media-and-insights/reports-and-presentations?q0_r=category%3DAnnual%2BReports4. [Accessed 30 April 2018].

Bolman, L.G. and Deal, T.E., 2017. Reframing organizations: Artistry, choice, and leadership. John Wiley & Sons.

Brammer, S.J. and Pavelin, S., 2016. Corporate Reputation and Corporate Social Responsibility. A Handbook of Corporate Governance and Social Responsibility, 437.

Dias, A., Rodrigues, L.L., Craig, R. and Neves, M.E., 2018. Corporate social responsibility disclosure in small and medium-sized entities and large companies. Social Responsibility Journal.

Gamu, J.K. and Dauvergne, P., 2018. The slow violence of corporate social responsibility: the case of mining in Peru. Third World Quarterly, pp.1-17.

García?Meca, E. and Pucheta?Martínez, M.C., 2018. How Institutional Investors on Boards Impact on Stakeholder Engagement and Corporate Social Responsibility Reporting. Corporate Social Responsibility and Environmental Management, 25(3), pp.237-249.

Lanis, R. and Richardson, G., 2015. Is corporate social responsibility performance associated with tax avoidance?. Journal of Business Ethics, 127(2), pp.439-457.

Sharif, M.M. and Scandura, T.A., 2014. Do perceptions of ethical conduct matter during organizational change? Ethical leadership and employee involvement. Journal of Business Ethics, 124(2), pp.185-196.

Waller, D.S. and Lanis, R., 2009. Corporate social responsibility (CSR) disclosure of advertising agencies: an exploratory analysis of six holding companies’ annual reports. Journal of Advertising, 38(1), pp.109-122.

Zhu, W., May, D.R. and Avolio, B.J., 2004. The impact of ethical leadership behaviour on employee outcomes: The roles of psychological empowerment and authenticity. Journal of Leadership & Organizational Studies, 11(1), pp.16-26.