Discuss about the Environmental Information To Users Of Reports.
Corporate social responsibility in more and more utilized as a communication tool for enhancing the company’s image to the public. An example of this is the environmental legitimacy, which is considered as an important tool of management research since the company tends to be competitive as they are successful in the establishment of the environmental legitimacy. Organizations often cope with issues by engaging themselves in corporate sustainability reporting for showing the society that the nations are legitimate and that they re acting for society and not against the norms (Gray, Dey, Owen, Evans, & Zadek, 1997). Legitimacy theory can be explained as the ideology that company only can continue to exist and grow is the society where the business is being conducted perceive them as legitimate.
A dam in Brazil which was holding back wastewater from iron ore mine owned by BHP and Vale burst in 2015. This burst devasted the nearby town of the mudslide and killed nearly 17 people and more than 50 people were injured. According to the officials, more than 40 people went missing. The village of Bento Rodr which was situated near the dam was practically buried in the mud. The situation was grim and it was dark completely. The dam was Operated by the company of Samarco, which was a joint venture in between Anglo Australian mining giant BHP and Vale company. The case shows how many people died just because of the negligence of the companies involved. Considering the case as per the legitimacy theory discussed by (Tilling, 2006) legitimacy theory is derived from the concept of the organizational legitimacy which shows that companies continually seek for ensuring that they are operating within the bounds and norms of the respective society. Though the exact reason of the burst of the dam was not known by the authorities we feel that the state mining regulations were inadequate and the owners of the dam company BHP and Vale and even the operator Samarco company completely failed in living up to the corporate social responsibility standards. The case is a mere showcase of irresponsible adoption of legitimacy theory in the company.
The case of Brazil disaster can be seen as a harmful event of firm’s legitimacy. The information analyzed in the case under the environmental aspect can be easily linked to legitimate theory. The mentioning of just one or two environmental parameters and the silence regarding the negative ones is considered as distraction method putting focusing on the factors that made the image of the BHP Company more profitable. At the same time, BHP and Vale company’s officials were vocal trying to give the impression of the environmental responsible company in order to shift focus from negative incidents in line with the legitimacy concepts (Archel, Husillos, Larrinaga, & Spence, 2009).
According to the companies involved, they proclaimed that it was not a mistake rather it was an accident and were looking for rigor for determining what exactly happened. In one statement by the owner of the company, he said that he is concerned about the employees of Samarco company and their families. He also said that they are concerned about the Bento Rodrigues that was devasted by the flooding and they are concerned about their welfare (BHP, 2005; BHP, 2006). However, the main point here is that nothing has been done as part of social responsibility by the company for the welfare of such people till date. Such type of disclosure is merely disclosures of regaining sympathy from the public and also gaining legitimacy 9nstead of the genuine attempt of serving the societies of the affected people. It is a clear case of mistake and not an accident because the companies failed in abiding by the rules laid down for such companies by OECD. The companies showed negligence in monitoring the wastewater management and the harm which the toxins in the wastewater caused to the iron made Dam which ended up in disaster (Hybels, 1995).
The main factor responsible for such disaster is the emergence of the serous tailing storage failures by the company in the past years. Through the supply chain of the BHP and Vale companies, the operators have neglected the rights of human welfare and environmental laws which affected the business relationships and led to disaster (Mobus, 2005; Deegan & Rankin, 1997).
Legitimate crisis wee experienced by BHP in the month of November in 2015 because of Samarco dam failure. By comparing the sustainability reports in 2015 and 2016 before and after the incident took place, we were able to determine that there were several differences in the reports of the two years related with the Samarco incident. This section illustrates with the representation of the difference and the offers relevant analysis and possible reasons for the differences in the reports (Tilling & Tilt, 2010).
Firstly, in the sustainability report of 2015, BHP officials stated just small paragraph about the operation on Samarco which shows that Samarco might be an insignificant operative section for the company. By contrast, the company included a separate section to disclose the Samarco in the sustainability report of 2016 for rebuilding the social legitimacy after the disaster took place.
In addition to it, the nature of eth reports regarding the Samarco varied from one another on a high scale. In the 215, the report of the BHP company focused on the nature of the non operated in the venture and in fact they released more information associated with the Samarco in the report of 2016, presenting themselves as a qualified dignified company people (Owen, 2008).
Legitimacy is basically a generalized perception from the public which reveals that the actions of the company are desirably accountable with the socially constructed system of norms and values. As per the theory of legitimacy, the company applies strategies for managing legitimacy which includes repairing legitimacy after the crisis happens.
On the basis of the analysis of the sustainability reports of two years, we were able to determine the following legitimacy strategies that were employed by the company.
Firstly, it was visible by seeing the prior concerns on the welfare of the people living in the affected area and communities, BHP intended to reveal their corporate responsibility were strongly legitimate and congruent with the norms that are socially accepted.
Second important point to be considered is that BHP defended themselves by basically alleging it tool immediate actions towards offering support to the communities that were affected and making high-level commitments to the people for the compensation and helping them in restoring their life
Moreover, the company even tried to enhance the factor of credibility of its disclosure by developing monitors. By basically addressing the rules of government and the involvement of the local communities, the company basically persuaded audiences that they can safely resume pragmatic exchanges with the troubled company.
Another important point noted was that the company repaired the legitimacy by disassociation factor. They tried to separate themselves from the geographic locales by saying that the company would only restart when it will be safe enough and the company will obtain the regulatory approval.
Summing up the argument, it can be said that the company made changes in the sustainability reports in 2016 and even employed strategies to repair the legitimacy, attempting to communicate with the audience affected and influence the perception f people of the company after the incident took place.
The reports of BHP avoided mentioning that the Samarco dam failure is considered as the biggest technological failure and disaster that has ever led to the biggest lawsuit against the company in the history of the country, which is revealed by many of the resources. Six of the main executives were charged with criminal homicides.
Just taking responsibility for supporting Samarco and the local people in the response effort does not end up the obligations of the company. They should have focused on immediate and future needs of the people who have and are facing immense uncertainty because of their business operations. As per the legitimacy content of the company, the company should be transparent and accountable for disclosing any information related with such serious matter, but the till date the company’s officials are refusing to comment on or admit knowledge of the incident before handed. This clearly shows integrity issues of the company and not being accountable towards responsible business conducts (Gray & Lavers, 1995).
There seems to be no doubt that the regulators and the companies responsible need to learn from the disaster and should ensure something like this should never happen again. But the chronology of the incidents suggests that voluntary self-regulation is not at work for the companies nowadays. Being part of OECD guideline follower and also being legitimate towards corporate social responsibility, the shareholder, customers, investors and the companies attached with the company have the right to know what BHP company was aaware of about the incident and they knew about what exactly they planned to do. There is a requirement from the stockholders to call BHP to stand up to the commitment levels to transparency and making public aware of the social and environmental assessment and risk mitigation strategies (Tilling, 2004).
The disasters happened in Brazil reveals that the industry of mining has not done much for ensuring safety and responsible conduct of business around the globe. As depicted in the sustainability reports the disaster was not an incident, it clearly shows the irresponsible attitude of the company owners towards the disaster in fact the fact remains that it was a disaster that could have been prevented through robust planning and oversight monitoring (Van der Laan, 2009).
The companies involved in the case failed in to act on such event and therefore in the eyes of legitimacy theory they are dreadful and it only natural that the BHP just for the sake of inquiry was addressing the problem in their report. The Checklist of BHP was very unimpressive. In many of the aspects, there was the majority of red which showed that limited source was utilized increasingly over the year. The disclosure checklist was based on GRI indicators and it was to be questioned. BHP Company was holding A + level, while the fact list that a lot of environmental indicators point to negative result has no value in such matter. This shows that the GRI guidelines are just tools for showing what the company has done instead of reflecting damages and progress (Moerman & Van Der Laan, 2005).
Conclusion
When looking at the fact that BHP mentioned the scandals in the sustainability reports it paints, from the perspective of legitimacy theory, a picture of company comes to mind that do not take incidents like that of Dam break very seriously. It is off considering that BHP rite n their report that it is important for them to maintain good relationships with the society and stakeholders that such issues and scandals are not monitored properly (Mousa & Hassan, 2015).
The findings reveal that the companies involved in dam case of Brazil were contributing to the better environment which is considered as the main requirement of business. What has been identified is that company had environment enhancing projects, while the same time they are involved in varied severe environmental related scandals. This has resulted in mining companies’ environmental performance being contradictory when compared with their values. While writing research it became more and more convinced regarding the impossibility of the mining industry being environmentally sustainable. truly green mining companies concentrate efforts in conserving and recycling minerals than collecting them and making the industry senseless. The analysis in our report concludes that the BHP Company, Vale Company and even the operator company need to be labeled as brown silent firm. On the grounds of being environmentally harmful undoubtedly states that these companies are brown.
The findings have several broad implications for the international bodies, authorities of government and professional accounting bodies that are responsible for developing the policies in respect of the corporate social responsibility. The results of the study show that companies are required to disclose the information in allaying the concerns of public and legitimizing the operations herein activities does or does not actually conform to the expectations of the public.
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BHP. (2006). Sustainability Report of BHP. BHP.
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Tilling, M. V. (2006). Refinements to Legitimacy Theory in Social and Environmental Accounting. Flinders University.
Tilling, M., & Tilt, C. (2010). The edge of legitimacy: voluntary social and environmental reporting in Rothman‘s 1956-1999 annual reports. Accounting, Auditing, and Accountability Journal, 23(1), 55-81.
Van der Laan, S. (2009). The role of theory in explaining motivation for corporate social disclosures: Voluntary disclosures vs’ solicited’ disclosures. Australasian Accounting, Business and Finance Journal, 3(4).
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