Corporate Sustainability Reporting is the reporting on a company’s social, environmental and operational activities that involve both quantitative and non-quantitative information that are important to be disclosed to the key stakeholders whether external or internal and its ability to deal with the risks arising. The principles followed while reporting for corporate sustainability is those of Global Reporting Initiatives (GRI). Organizations are required to measure their environmental and social performance and account for it accurately. (Atkinson, 2012)
Non-financial information may be presented in different formats whether in sustainability reports or annual reports. The GRI principles helps the businesses and governments to account for their activities that has an effect on the environmental, social and sustainability issues effectively and disclose to the public. The GRI standards is heading towards management of sustainability and disclosing of general information. For the purpose of providing highly qualitative and quantitative information which are important to be disclosed for a reporting entity, reports are to be prepared there are three Universal Standards:
Similarly, Corporate Governance refers to a set of guidelines and practices and processes by which an entity is being guided and controlled. It concentrates on fulfilling the needs of different external and internal stakeholders. Corporate governance revolves from an entity’s objectives to its action plans and controls that are taken into consideration for measuring performance and for making corporate disclosures.
For the purpose of corporate reporting on sustainability, we can undertake a comparative analysis of two companies listed on Australian Securities Exchange (ASX). Let’s take two companies working in the same sector called mining sector, that is, Sandfire Resources NL and BHP Billiton Limited. (Berry, 2009)
Sandfire Resources NL is an Australian company involved in the exploration and mining of minerals and is a leading producer of copper. It owns DeGrussa Copper-Gold Mine that produces highly qualitative copper. Its movement from drilling, development, financing and construction activities to production of copper within 3 years has been considered as an remarkable achievement. Such achievements set as a benchmark for other companies involved in the resources sector in Western Australia. It aims at producing the most qualitative resources which are capable of generating substantial returns so as to deliver maximum satisfaction to its stakeholders. (Boyd, 2013)
On the other hand, BHP Billiton Limited is one of the leading resources company in the world. It is involved in extraction and production of minerals with around 60,000 employees and works mostly in Americas and Australia with headquarters at Melbourne. Its main resources include copper, iron-ore, coal and petroleum. It is considered as the largest producer of aluminium, copper, metallurgical coal and iron-ore. It is also involved in extraction and mining of energy coal, oil and gas. It aims at its long term goals that states maximum shareholder value through exploration, processing, developing and marketing of natural resources. (Seal, 2012)
CSR has now been a significant issue in the mining and resources sector. Mining operators might want their companies to not comply with CSR issues but such an idea could hurt the company’s reputation in the long run. If a company falls into the trap of not complying with CSR obligations, it could take years for it to escape from such fallout. Also, such a trap could act as a threat to the company’s reputation which could create severe situations for the company to earn back that trust from its stakeholders. (Dash, 2016)
For mining operators, the key focus should be on the environment where issues such as climate change, pollution are concerned and that is why, mining industry faces a lot of pressure from the environmentalists, activists and various other bodies providing public services such as NGOs and government legislation. Another issue faced by such operators is frequent global expansion as the lands discovered for expansion might be claimed by a large population. Where the mining industry is expected to meet its sustainability standards, it is also important for them to consider whether their third parties such as contractors comply with the CSR compliances or not as a slightly incompliance could drag a company into severe situations. (Datar M. S., 2015)Therefore, it is important for mining operators to comply with CSR objectives so as to enjoy a better status in the industry and be preferred more than its competitors. Thus, we can conclude that mining industry faces alot of pressure and therefore, the sustainability reports prepared by such operators are just not public relation exercises as anything found fraudulent in it would be a company’s loss.
Both BHP and Sandfire report have been prepared according to the guidelines of Global Reporting Initiative (GRI) principles. In both the reports, we found that the companies regularly conduct meetings with its stakeholders so as to understand the key sustainable issues. However, on comparison we found that BHP’s Sustainability Report is better than Sandfire’s report in terms of quality and quantity. Let us understanding this through one the reporting and accounting of one of the key CSR objectives that is ensuring health and safety to its employees. When we see BHP’s report, its matter of discussion is divided into sections, that is, our approach and our performance. ‘Our Approach’ states the risks & issues faced such as injuries caught, their approach towards such issues such as regular medical scrutiny and the activities they are undertaking such as gym facilities, providing healthy food, vaccinations etc whereas ‘Our Performance’ states the quantitative figures with graphs giving a clear understanding of improvement/disimprovements. (Girard, 2014) For instance, BHP has been able to reduce occupational health exposures to carcinogens and airborne pollutants by 76% against a commitment of reducing it by 10% by 30th June,2017 through the introduction of new technologies. However, the occupational illness among employees is 4.92 per million hours worked in FY2017 which is like 18% more than FY2016 and in contractors, it is 1.43 per million hours worked which is like 23% more than previous year.
Coming to Sandfire report, under the same topic, the report do contains the principal hazards in terms of fatal risks. But, it seems like the company talks more about its vision and mission such as what we look forward for, what we ensure, etc. The activities undertaken are like awareness programmes, supervisor’s reviews, etc. Where its principal hazards includes fire hazards, explosives, chemicals usage in certain places, etc its injuries include sprains, manual handling, strains, lacerations and fractures. (Robert Parrino, 2013)Where mining companies involve injuries like hearing loss, skin diseases, silicosis, etc it is strange that Sandfire accounts for such minor injuries. Coming to qualitative information, Sandfire reports for no fatalities or illness or injuries in FY2017. The company’s TRIFR (total recordable injury frequency rate) per million hours worked has reduced from 7.08 in FY2016 to 5.
While Trif in BHP is 4.2 per million hours worked in FY 2017 which shows an improvement of 2%as compared to previous year and 9 %improvement over 5 years.
The reports are to be prepared with accurate measurements that are measured against some benchmark such as in BHP, the benchmark is set with its previous year’s results whereas detailed measured information could not be found in Sandfire. For example, “Overall our safety performance has improved year on year”. Such a statement could have been explained in more quantities terms and graphically as well. We also discovered that in case of Sandfire, the positive results are highlighted in the beginning of the discussion whereas such highlights are not found in BHP. (Ihlen, 2009) Overall, in case of Sandfire, we will find its achievements and other social initiatives it took towards the society whereas in case of BHP, we find each and every concern discussed thoroughly in terms of both quality and quantity and graphically as well. Thus, we get a feeling of transparency more in BHP’s report than Sandfire.
Conclusion
It is difficult to conclude about whether the two reports can be trusted to serve the good as such decisions can be made after a better analysis of all other related reports. Also, where the operations are large scale (BHP in our case), it is obvious to expect more risk as compared to company having low scale operations (Sandfire in our case).
Considering the current scenario, it is expected to visualize the gaining importance of CSR reporting for an organization because as per researches, for a business to survive in the long run, it is important for it to keep its stakeholders happy. Growth would come not only from its effective and efficient operations but also from the satisfaction of its stakeholders.
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