BHP Billiton’s Sustainability Policy
Since the 1990s, there has been an ongoing trend of publishing nonfinancial reports by big organizations. Initially, these reports focused on the physical environment. Today, this trend has evolved to consider a company’s economic performance, as well as its social relations data (Mangos, 2015, p. 14). BHP Billiton, a metals and mining company in Australia, is among the few mining firms that pioneered this trend. Since its formation in 2001, BHP Billiton has been committed to the health and safety of people, the environment, and the community at large. To achieve its sustainability goals, BHP Billiton uses the Global Reporting Initiative (GRI) framework (Sustainable Performance, 2018, p. 1). The essay investigates whether the GRI framework provides BHP Billiton with sufficient information required to develop a desirable level of sustainability performance or not.
In the context of BHP Billiton, using the GRI framework is both beneficial and problematic to the company. One of BHP Billiton’s core values is sustainability. This implies that the pros of using the GRI framework by BHP Billiton outshine its cons. On the positive side, the GRI framework promotes BHP Billiton’s economic, environmental, and social sustainability. According to (Hahn & Hahn, 2014, p. 44), the GRI framework compels BHP to act against the classical management theory since the company must account for the stakeholder social needs. This enables BHP Billion in striking a balance between its economic, social, and environmental goals. Also, in BHP Billiton, the use of the GRI framework increases the accountability and transparency of economic, social, and environmental performance report. On the other hand, the GRI framework challenges BHP Billiton’s management to report the negative aspects of the company’s sustainability performance. In particular, the reporting of “negative aspects” endangers its stakeholders to perceive the company’s corporate prospects as being against the societal values (Hahn & Hahn, 2014, p. 92). Also, the GRI framework’s output in BHP Billiton has been criticized for adding no value except to the experts familiar with environmental and social standards.
BHP Billiton’s core operations are mining, a sector that has had increased social pressures to act responsibility (CSR). In reference to the GRI framework, BHP Billiton makes its environmental and social reporting through corporate annual reports. As per its sustainability value, BHP adheres to the guidelines of GRI to put health and safety first, become environmentally responsible, and support the community. As per (Sustainable Performance, 2018, p. 1) report, there has been an increasing trend towards environmental disclosure in BHP’s annual report. Also, the company has been consistent in the publishing of sustainability reports and stand-alone ecological reports. With the GRI framework, BHP Billiton’s environmental, social, and sustainability reporting has improved, raising the company’s image and reputation in the market industry. This is in reference to the systems theory of management, which recognizes society as a complex system of elements, including people and their diverse beliefs (BHP.Com, 2019, p. 2). Besides, BHP Billiton has been relying on the GRI guidelines in making CSR reports, and this has allowed the company to accurately estimate the impact of their mining operations on the environment, society, and economy at large.
Despite the significant benefits of using GRI in BHP Billiton’s sustainability reports, the extent to which reported social and environmental data are reliable is a matter of concern. As per (Sustainable Performance, 2018, p. 1), there is a significant volume of unverified and inconsistent information included in BHP Billiton’s annual environmental performance reports. Another development challenges associated with the GRI framework, which affects BHP Billiton is that most of the annual social and environmental disclosures are qualitative and designed to favour the company itself. This means that BHP Billiton’s social and environmental disclosure reports might be subjective rather than objective, compromising their actual use (Mangos, 2015, p. 24). Besides, this is against the company’s sustainable development needs, since some present needs are met by compromising the social and environmental needs of the community to achieve BHP’s economic needs. In addition, the strict adherence to GRI framework policies compels BHP to do the right thing by abiding with the environmental obligations. Although this allows the company to contribute positively to the local communities, taking GRI framework standards, hinders BHP Billiton from addressing the significant sustainable development challenges present in the metals and mining industry (Mancini & Sala, 2018, p. 98).
Given the industry in which BHP Billiton operates, Triple Bottom Line (TBL) is the other sustainability framework which the company can use to guide its sustainability reports. In economics, the TBL framework compels companies to commit to focusing as much on environmental and social concerns as they do on profits (Mancini & Sala, 2018, p. 111). Instead of one bottom Line, TBL posits that there should be three: people, profit, and the planet. In BHP Billiton, the TBL framework would enable the company to measure the impacts of its activities on people, profits, and the earth. Also, by using the TBL approach, BHP Billiton would be able to conserve the environment by reducing the environmental pollution. This is aligned with the human relations management theory, for the community matters in the company’s growth and development plan (Mangos, 2015, p. 31). On the negative side, TBL could become meaningless to the company because the framework does not include any guidelines, and BHP can claim to have followed TBL when it has not. So, the fact that TBL lacks any specific guidelines, BHP Billiton’s sustainability reports would lack practicality and accountability. In addition, the use of the TBL framework in BHP Billiton might encourage status quo-capitalism in the company, which in turn would contribute to massive degradation of the environment, which is against the company’s sustainability value (Hahn & Hahn, 2014, p. 212).
Sustainability reporting has both internal and external benefits to the organization. Global Reporting Initiative (GRI) enables companies to report their social, economic, and environmental performance. In BHP Billiton, the use of the GRI framework has contributed to both internal and external benefits to the organization. Internally, GRI has enabled the company to understand risks and opportunities, streamline processes, benchmark, influence business plans, and compare performance. Externally, the GRI framework has assisted BHP in mitigating the social, environmental, and governmental impacts, raise company reputation, and ensure sustainable development. Triple Bottom Line, is another framework that BHP can adopt to steer its environmental sustainability goals, address societal concerns, and recognize the changes in the mining sector. Therefore, organizations should implement the use of sustainability frameworks to increase the accountability and transparency of environmental, economic, and social performance.
References
BHP.Com, 2019. BHP Sustainability Report, 2019. [Online]
Available at: https://www.bhp.com/investor-centre/sustainability-report-2019/
[Accessed 23 August, 2020].
Hahn, R. & Hahn, R., 2014. Legitimizing Negative Aspects in GRI-Oriented Sustainability Reporting: A Qualitative Analysis of Corporate Disclosure Strategies. Journal of Business Ethics, 123(3), pp. 41-420.
Mancini, L. & Sala, S., 2018. Social impact assessment in the mining sector: Review and comparison of indicators frameworks. Resources Policy, Volume 57, pp. 98-111.
Mangos, N., 2015. Sustainability performance of the Australian minerals industry: Does the global reporting initiative provide enough?. Knowledge Management, 15(2), pp. 13-31.
Sustainable Performance, 2018. Global Reporting Initiative (GRI). [Online]
Available at: https://www.sustainable-performance.total.com/en/reporting/reporting-standards/global-reporting-initiative-gri
[Accessed 23 August, 2020].