Write a report on the Company’s CSR activities and Governance structure.
Corporate social Responsibility (CSR) is generally considered an approach which mainly pushes the organizations to analyze the effects of their operations on the environment, society, and community. In other words, CSR is a business approach which ensures organization’s contribution in the sustainable development by providing various benefits for all the stakeholders of the organization.
CSR is a concept which has different definitions and practices, and this concept is applied differently in each organization and country. Therefore, CSR is a broad concept which addresses different topics. No matter how this concept is applied, the main purpose of the CSR is to ensure the changes towards the sustainability. There are number of companies which achieve great results by making the extraordinary efforts with their unique initiatives of CSR, but it must be noted that it is difficult to be remarkable on every aspect of CSR (Crowther & Aras, 2008).
Structure of this report includes CSR activities and Governance structure of the BHP Billiton Ltd and also states the analytical frameworks in context of the Corporate Responsibility & Ethics Course which includes Carroll’s Pyramid and Wartick and Cochrane’s Typology. This report also analyze the company’s revert to the expectations of the key stakeholders and gaps between the real performance and expected performance. Lastly, paper is concluded with brief conclusion.
BHP is a leading resource company of the world which mainly extracts and process different minerals, oil and gases. BHP employed almost 60000 employees and contractors, mainly in America and Australia. Products of the company are sold across the globe with the help of the different teams of marketing and sales. Global headquarters of the BHP is established in Melbourne, Australia.
BHP conduct their activities under Dual Listed Company structure with two parent companies, but all the entities worked as single economic entity. The main objective of the organization is to create long-term shareholder value for their shareholders in the organization. All these things are done with the help of the strategy framed by the company that is to own and operate by commodity, geography and market (BHP, 2018).
BHP ensures highest level of corporate governance in their organization and also takes steps to encourage such culture in the organization that not only values ethical standards, but also ensures integrity of the corporate (BHP, 2018).
Sustainability is the most important aspect of the strategy framed by the BHP Billiton, and this aspect is integrated in every operation of the company. BHP ensures different components for the purpose of fulfilling its obligations under corporate social responsibility such as it ensures health and safety of the employees, effects of the operations of the company on the environment, respect human rights, and also provide necessary support to the communities in which they operate. In context of communities, BHP provides support to the local cultures and also helps for the development of the country’s economy. There are number of operations conducted by the organization which last for decades and it is necessary to get social licenses for such operations (BHP, n.d.).
BHP also complied with all the laws and regulations of the authority in which they operate their business. The main aim of the organization is to exceed legal and regulatory obligations, and the company’s approach in the context of sustainability is stated in the charter of the organization and this approach is based on the requirements standards. These standards define the requirements in context of minimum performance standards and also provide the base for the purpose of developing and implementing management systems at our assets. Standards of the organization are consistent with the principles of International Council of Mining and Metals’ Sustainable Development Framework, the United Nations’ (UN) Global Compact, the UN Declaration of Human Rights, and the Voluntary Principles on Security and Human Rights (BHP, 2017).
Those employees and contractors which are working with the BHP Billiton must ensure health & safety, environment, and community standards stated by the organization. BHP also make efforts to encourage their suppliers, agents, and service provider to ensure such business practices that are complied with the standards adopted by the organization. Following are the results of the CSR activities conducted by the organization:
Organization believes that it is necessary to adopt high standards of corporate governance for the purpose of effective implementation of the strategy, creating long term value for stakeholders, and for maintaining social license to conduct their operations.
Board of directors of the organization oversees the approach of the organization towards sustainability, and in this context Sustainability Committee of the board provides assistance for governance and monitoring. This committee also considers the matters related to HSEC and human rights which includes the monitoring of different procceses for the purpose of identifying and managing HSEC related risks, compliance related to laws and regulations, and also the performance related to HSEC and human rights performance. Members of this committee are the Non-executive Directors, and all the directors are appropriately skilled in HSEC and also in the matters which are stated by the board.
The Board’s Risk and Audit Committee provide assistance for risk management in context of sustainability, and remuneration committee take advice from sustainability committee while determining the performance against HSEC-related scorecard targets. It must be noted that sustainability committee of BHP also provide advice on different matters related to these scorecard targets, and this advice is considered by the remuneration committee while taking final decisions.
BHP also takes advice and guidance from outside experts on the matters related to sustainability in lieu of the decision making progress of the organization. BHP forum related to corporate responsibility is the most important part of the program of stakeholder’s engagement, and this forum includes 8 independent experts expertise their knowledge in different fields of sustainability and these experts provide immense contribution to the sustainability approach of the BHP. They also provide advice related to future and current issues, and help the organization to understand the broad impacts of their actions.
Theoretical framework for CSR:
Carroll’s CSR pyramid is a framework which mainly helps in defining how and why organizations must meet their obligations towards the society. Following are the essential elements of this approach:
This pyramid is built on the basis of profit, which sates earning profit is the main aim of organization.
This pyramid also states the obligation of business organizations to comply with all legal and regulatory frameworks.
Before complied with the philanthropic options, organizations must fulfill its ethical duties (Business, n.d.).
Following are four responsibilities which are stated by the pyramid and these responsibilities are stated below:
Economic- it defines the business obligation to earn profit because this is the only way through which through which business provides benefits to the society in long run. BHP Billiton meets this obligation as company paid almost US$4.7 billion as taxes and royalties in FY2017.
Legal- this is another obligation of company to comply with all legal and regulatory framework such as employment, competition, etc. BHP ensures safe and healthy working environment for their employees at workplace, and for this purpose organization provides equal opportunities to the employees to fulfill their potential. BHP employ, develop, and promote the human resource on the basis of merit. BHP also made strict standards to eliminate any behavior related to unlawful discrimination, bullying or harassment (Great Kansas City, 2010).
Ethical- it includes the responsibility of the organization to act ethically and morally, and for this purpose BHP Billiton develop code of conduct which shows the application of BHP charter on the basis of behavioral standards for all those who are working and connected with the organization. Organization conducts its operations by complied with the code and this is the condition of employment and it is necessary for all the employees to undertake annual training on the basis of code.
Philanthropic- it includes the obligation of the organization to give back to the society. However, this responsibility is discretionary in nature, but important in nature. In this context, BHP contributed 1% of pre-tax profits for the benefits of community from 2001 (Caroll, 1979).
Wartick and Cochran in their model define the fundamental communication related to the principles of social responsibility. In this context, BHP conducts various programs which contribute for the welfare of the society (Wartick and Cochran, 1985; Pierick, Et Al ., 2004).
Response of the BHP:
For the purpose of ensuring development of community BHP take various actions. For fulfilling the outlooks of the investors and enhancing the reputation of the company BHP work openly with the communities in which they work and with the governments also. Planning of community development includes:
Gap between expectation and reality:
Following is the gap between expected performance and real performance:
Company targeted zero work-related fatalities in health and safety context, but in actual during the period of 2017, one work related fatality took place at BHP Escondida asset. Company is not able to meet this expected target in the area of health and safety of workers. It must be noted that company also meet very little expectation of stakeholders in context of environmental performance because still operations of the organization contributes in greenhouse gas emissions.
Conclusion
CSR is an important concept of business which ensures organization’s contribution in the sustainable development by providing economic, social and environmental benefits for all the stakeholders of the organization. After considering the above facts, it can be said that BHP Billiton Ltd conduct actions for fulfilling their obligations under corporate social responsibility and corporate governance.
BHP must take actions to ensure zero fatality at the workplace and for this purpose organization can arrange some training and programs for their workers. These programs help the workers in understanding the things related to health and safety in better manner.
References:
BHP, (2016). Community Our Requirements. Available at: https://www.bhp.com/-/media/documents/ourapproach/governance/160404_community.pdf?la=en. Accessed on 6th February 2018.
BHP, (2017). Sustainability Report 2017. Available at: https://www.bhp.com/-/media/documents/investors/annual-reports/2017/bhpsustainabilityreport2017.pdf. Accessed on 6th February 2018.
BHP, (2018). About us. Available at: https://www.bhp.com/our-approach/our-company/about-us. Accessed on 6th February 2018.
BHP. (2018). Governance. Available at: https://www.bhp.com/our-approach/our-company/governance. Accessed on 6th February 2018.
BHP. BHP Billiton Petroleum Supply Corporate Social responsibility Policy. Available at: https://www.bhp.com/-/media/bhp/documents/suppliers/hsec-information/petroleum/bhpbpetsupplycorporatesocialresponsibiltypolicyrequirements.pdf?la=en. Accessed on 6th February 2018.
Business. Carroll’s CSR Pyramid. Available at: https://www.tutor2u.net/business/reference/carrolls-csr-pyramid. Accessed on 6th February 2018.
Carroll, A.B., (1979). ‘A three-dimensional conceptual model of corporate performance’. In: Academy of Management Review 4, 4, pp. 497-505.
Crowther, D. & Aras, G. (2008). Corporate Social Resposibility. Available at: https://mdos.si/Files/defining-corporate-social-responsibility.pdf. Accessed on 6th February 2018.
Greater Kansas City, (2010). Pyramid of Corporate Social Responsibility. Available at: https://www.growyourgiving.org/giving-blog/pyramid-corporate-social-responsibility. Accessed on 6th February 2018.
Pierick, E. Et Al ., (2004). A framework for analysing corporate social performance Beyond the Wood model . Available at: https://ageconsearch.umn.edu/bitstream/29081/1/rp040503.pdf. Accessed on 6th February 2018.
Wartick, S.L., and P.L. Cochran, (1985). ‘The evolution of the corporate social performance model’. In: Academy of Management Review. 10 4, pp. 758-769.
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