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Measuring and Reporting Sustainability [Bhp]

In: Business and Management

Submitted By domm90
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Introduction Peoples wants are unlimited but unfortunately resources are not, and since the beginning of production firms have been depleting the Earths finite resources. Firms have now been attempting to achieve a sustainable existence, this is because one of the firms goals is to run indefinitely, without sustainability they may meet the need of the present but may sacrifice the needs of future generations. Companies now are looking to more sustainable products or services in order to keep their company running long into the future.

BHP Billiton has taken one such initiative, as one of the largest mining companies, it understands the importance of the environment to big business, both social, environmental and economical, therefore has been producing readied sustainability reports for the past 3 years.

Sustainability strategy
BHPs sustainability strategy is incorporative of how they can match their capabilities to accomplish its objectives but without compromising their or futures generations ability to use their opportunities to achieve their goals in the marketplace. They have done this through four main foundations in which it is trying to improve sustainability; they include safety, healthcare, environmental effects and lastly the community at large.

Safety is an important factor for BHP as it is a large mining company many of the jobs include some level of risk. There official motto for safety is “we do not compromise our safety values”. They planned to have Zero fatalities and a reduction in recordable injuries through identifying the effective risk controls, and eliminating the root of these injuries, as seen in this table below.

Healthcare is a contributing factor to BHPs successes as a healthy workplace is more efficient then an unhealthy one, this is because BHP “seeks ways to improve the health of our workforce and the community”. They have planned to assess the potential health care issues on each job site, reduce exposure to unhealthy sites by 15%, and a further reduction of 30% in incidence of occupational illness. Because of BHP such diverse cultural and social elements it is also undertaking programs to help workers manage fatigue whom work shift or night works, drug and alcohol education as well as ongoing medical surveillance especially in the field of hearing and eye sight loss.

Environmental effects is the largest area in which BHP has been attempting to mend over the past few years, as a large natural resource provider it is its main objective to reap and provide the raw elements of finite resources which we all need and use in day to day objects. Unfortunately this requires large destructive force on the environment. They are ensuring to take responsibility for “actions of their own business and work with governments, and other stake holders to address the challenge of climate change”. In addition to this they are also proposing targets to be met for greenhouse gas emmitions, greater planning for efficiency of resource allocation to reduce pollution. Moreover they are looking at increasing biodiversity both ecological values as well as land use aspects.

Community at large is a socio-economic strategy to help those whom are suffering within the world, with respects to fundamental human rights or cultural heritage. This is can be seen through BHPs statement within its sustainability report that it will “Engage regularly, openly and honestly with our host governments and people affected by our operations, and take their views and concerns into account in our decision-making”. Such initiatives as investing 1% Of pre tax profits to start or continue running community programs, and aiming to have no large community incidence such as oil spills or community fires.

GR initiative

The Global Reporting Initiative is the world’s most used framework, for sustainability reporting. This is because of its defining and necessary principles which focus on economic, environmental and social factors using a wide range of both quantitative and qualitative measures. It does this through Defining, ensuring and guiding the reporting entity to disclose to them a correct management approach based on Several performance indicators split into two categories, defining principles and Necessary principles.

Defining principles are indicators for report content, some include; Materiality, indicates the organisations ability to reflect environmental and social impacts. Sustainability context, that reports should present a wider context of sustainability. Completeness, shows the full impacts throughout the value chain within the reporting period. Stake holder inclusiveness, responding to stakeholders interests within the reports.

Necessary principles are indicators for report quality, some include;

Balance, the report should be unbiased showing both positive and negative performance. Comparability, the information is displayed in such a way that it can be evaluated against other reports both of different companies and internally with previous reports. Accuracy, the information within the report is precise. Timeliness, is the quality which asses the reports readiness. Clarity is the aspect in which the report can be accessed or understood. Reliability, refers to how well processed the information has been and how dependable the information is.

GRI Versus BHP Billiton

As can be seen BHPs sustainability report is very comprehensive, in both quantitative and qualitative measures and also gives a very cohesive summery in a supplementary report called “our sustainability framework” but how does this compare with international standards using the global reporting initiative principles. To evaluate BHPs 2010 sustainability reports content we will use the four main principles.

The report does a really good job at focusing on sustainability factors such as environmental and social, this will inevitably influence stakeholders decisions about the businesses ethical standpoints thus has a good materiality. In addition to this BHP shows its impact on wider scale by using its sustainability framework with the four main foundations of safety, healthcare, environment and social impacts thus also does good in both completeness and sustainability context. Though this is then juxtaposed by its stakeholders inclusiveness, the report fails to explain how its helping stakeholders interests or expectations as it is very self involved and only goes into details of what BHP thinks is expected in this way it could be improved if it incorporated more association with its stakeholders within its report.

The reports content is pretty on par with the GRI, weeding out most of the principles and managing to show great leadership as one of the big mining companies. But how does it compare with the quality of the report.

The report takes a serious foot hold when talking about report quality, it has been produced in a similar manner for the past 3 years and can be easily checked to see how well it measures up to existing reports, and provisions tables of goals and outcomes to see how the firm has been progressing throughout the years thus it is a very comparable report to its previous ones. Moreover these reports have begin to be distributed on the internet (a public domain) and annually thus as any of its other reports it very timely. The report is also very accurate as it uses quantitative analysis and information in order to show its social and environmental impact instead of simply just stating how it went it gives an accurate figure. These figures although accurate are also very Reliable, BHP Billiton’s reports are seen and prepared by 145 internal reporters and is verified by 11 external auditors, since 2008s financial crises the level at which external auditors now must report is of a very high standard, and thus we can say that the information which is disclosed in the report will be very reliable.

Unfortunately even though the tables are very easy to understand the qualitative analysis is not the easiest to understand, for someone to simply pick up the report and begin reading it without any contextual information will find it somewhat difficult to follow although it releases a second report on their framework which once read may make the actual report allot clearer. The report is very off-balanced also, it tends only to gloat about the positive things that BHP has done but not so much on the negative impacts it creates with its large open mines, which does permanent damage to the environment. The report should be much more unbiased then it is, because people when reading it may only think that BHP is doing good for the environment. In this way the sustainability report could be much improved by showing its negative effects an making it easier to pick up and read so that stake holders can make a more of an informed decision.

In conclusion BHP Billiton takes a very professional, concise and reliable attempt at following the GRI framework and this report can be seen as a benchmark for other firms to use.…...

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