Examine The Corporate Social And Environmental Disclosures Of BHP.

The Concept of Corporate Social Responsibility and Sustainability Reporting

Corporate social responsibility or CSR is most important management concept that allows companies to integrate various environmental and social factors in their operations so to fulfill the expectations of stakeholders. CSR is described as the method through which organizations achieves a balance approach between various imperatives such as social, environmental, and economic, together it is known as Triple Bottom Line Approach. The sustainability report refers to the corporate report which is published by companies to reflect the social, economic and environmental impacts through the activities performed by them. The main aim of sustainability reporting is to help the organization in successfully analyzing, measuring and communicating the performance in relation to social, environmental and economical factors to the stakeholders of the company. As per GRI guidelines companies of types, size, sectors and from every corner of world are required to prepare the CSR report through the use of GRI Sustainability Reporting Guidelines. There are as such no mandatory reporting structures of CSR report except with few mandatory public reporting requirements. The factor that voluntarily motivates the companies to produce the information about their social and environmental factors in front to their stakeholder is to improve the legitimacy within the organization.

In this report critical review has been performed of four selected journal articles on sustainability reporting so that importance of sustainability reporting can be analyzed from the perspective of company contribution to the society. In addition to this sustainability report for year 2017 of BHP Billiton has been evaluated to discuss some of crucial activities that have been taken place during the reporting period.

Part A: Critical Review of the Four Selected Papers addressing the various aspects of sustainability and environment reporting

Research Paper 1: Examination of the corporate social and environmental disclosures of BHP from 1983-1997: A test of legitimacy theory

Summary

The present research study examines the sustainability disclosure of BHP Ltd from the year 1983 to 1997. The focus of the study is to examine the type of social and environmental disclosure made by the company for the selected period and examining if these types of disclosure can be explained by the application of theories of social contract and legitimacy. The study is important in the context as it evaluates the extent of sustainability disclosure made by the company in meeting the social expectations. The study tends to correlate social disclosure as a base for measuring the concerns of public. In this context, it has stated that the media attention has a direct impact on shaping the community concerns by investigating the sustainability reporting of BHP as per the societal concerns reflected by the attention of media. The author has adopted the use of content analysis for measuring the media attention and the corporate social disclosure. This involves extracting reliable inferences from the data gathered for delivering valid results. The study has depicted that societal pressure on the companies due to media attention causes them to make voluntary disclosures regarding their social and environment practices for ensuring that their actions are legitimate. The analysis of the social disclosure made by BHP over the selected period has depicted that the company has released positive news about its corporate social responsibility performance to a large extent whenever there is unfavorable media attention (Deegan, Rankin & Tobin, 2002).

Importance of Sustainability Reporting from a Company’s Contribution to Society Perspective

It can be stated from the overall analysis of the research article that it has proposed a relatively new insight for examining the quality of sustainability disclosures made by business entities. The overall findings of the research will prove to be very useful for the stakeholders to ascertain whether the information provided by a company is in relation to media attention or is true and fair. The text of the article has provided a simple and detailed analysis in relation to extent of sustainable disclosures made by the business entities as per the theory of legitimacy. However, the major weakness of the article can be stated as the use of weak evidences for supporting the major research issue. This is because it lacks any empirical investigation and thus the conclusions derived are mainly based on qualitative data analysis made of the sustainability reports (Deegan, et al., 2002).

The purpose of the research article is to examine the relation between the attributes of environment reporting and governance framework of corporate by citing the example of business entities operating within Australia. The research is important in the context of developing an insight into impact of board composition on the quality of sustainability reporting of companies. The social and environment responsibility is regarded as one of the prominent role of the Board and thus they are committed to develop a quality report in this context. The article has adopted the use of a quantitative data analysis approach for examining the annual reports of about 100 Australian firms listed on ASX for determining the quality of environmental reporting. The analysis has depicted a direct relation between the nature of environment reporting and the proportion of independent directors that are on the Board (Rao, Tilt & Lester, 2012).

The research article rather presents a very interesting insight into the context of environment reporting and corporate governance. The analysis carried out in the article is very useful for the management of corporations by establishing a relation between the board size and the quality of sustainable reporting. The text of the article has presented new interpretations into the issue of social and environmental disclosures. The article has presented detailed information into the topic of relation between the corporate governance and environment reporting. The use of quantitative data indicates the use of strong evidence for depicting this relation. The conclusion achieved is very useful for the business corporations to identify the optimal size of Board for delivering quality social and environment reports.

The purpose of this research to investigate needs for regulating the corporate social responsibilities and accountabilities. The question proposed by the research is important for developing an insight whether the corporate social reporting of corporations should be regulated or determined by the market forces. The arguments are presented in the favor of providing flexibility to the business corporations for determining the approach used for corporate social responsibilities. The research has adopted the use of content analysis that adopts the use of generating codes for extraction of the qualitative and quantitative information into the specific categories for deriving patterns for addressing the issue in context. It has involved a review of the submissions to an Australian Government Inquiry into corporate social responsibility. It has inferred that business communities favor the adoption of an anti-regulation approach in which they have the flexibility for determining the social responsibilities. The government has also adopted the use of free-market perspective and has decided against the use of national legislation in context of CSR duties of businesses.

Critical Review of Four Selected Papers on Sustainability Reporting

The research article is very important as it emphasizes on providing an adequate answer for the need for regulating the social and environment reporting of business entities. The text is useful as it helps in addressing eh critical issue of regulating the sustainable reporting by business corporations. The use of content analysis has supported in providing a detailed analysis in relation to this issue by gathering reliable evidences from the Australian Government Inquiry. The conclusion attained is final with presenting the view of government to not to regulate the sustainable reporting and adopting the use of free market perspective (Deegan & Shelly, 2014).

Environmental disclosures in the annual report: Extending the applicability and predictive power of legitimacy theory

The present article aims to gain an answer to the issue of ‘Why companies are disclosing environmental information in the annual report’. The question is important in the context of depicting the importance of legitimacy theory for increase in environment disclosure since the 1980s. The argument presented in this context that business discloses the information about their sustainable practices in the annual report to attain legitimacy. It has adopted the use of quasi-experimental method that involves the use of semi-structured interviews with senior personnel from three large Australian public companies. The findings has depicted that environmental disclosures of corporations are intended for attaining legitimacy.

The text of the article has provided a new insight about the importance of legitimacy theory in corporate social reporting of business entities. There is detailed analysis in relation to the research issue with the use of both qualitative and quantitative text. The text is written in a simple and detailed format to be easily understood by the readers. The use of empirical evidences presented for addressing the research issue makes the conclusion attained to be reliable (O’Donovan, 2001).

Value and purpose of sustainability

In the sustainability report of BHP the core purpose defined is to create the long term shareholder value providing natural resources in way of discovery, acquisition, development and marketing of all such resources. So it can be said that BHP has greater responsibility towards the society as it deals in extraction of natural resources (BHP Sustainability Report, 2017). In order to sustain in the market and serve the people BHP has defined six important and meaningful values. All these values are defined in below table:

Values	Purpose of Value
Sustainability	As per this value health and safety is the first priority of BHP. This value shows that company is highly responsible to the environment and also towards the commodities they extract.
Integrity	It mean company do what is right
Respect	BHP takes responsibility to embrace the openness, trust, teamwork, relationship and diversity which is equally beneficial for promoting humanity
Performance	It means BHP puts their 100% efforts to achieve the highest business results
Simplicity	BHP puts focus on things that matter most to the society
Accountability	It defines the responsibility and commitment of the BHP

(BHP Sustainability Report, 2017)

In the statement of CEO, it is clearly mentioned that safety is top most priority but two incidents at mines of BHP has taken life of two workers that put question mark on the safety norms of BHP. In the history of BHP the failure of Fundao tailings dam in Brazil has created a big question mark on integrity and sustainability values of company (BHP Sustainability Report, 2017). In response to this failure company has taken various steps to restore the wellbeing of the communities and environment affected. CEO has mentioned in his statement that BHP is committed to follow the minimum compliance requirement for the protection of environment. Management has worked very hard to reduce the impact of different operations and has also promoted the sustainable and conservative use of natural resources. BHP has taken various actions to reduce green house gas emissions and discloses all their actions in the sustainability report (Merry, 2015).

Evaluation of BHP Billiton’s 2017 Sustainability Report

BHP has developed very rigid sustainability framework that put health and safety at first priority. As per the sustainability framework BHP is environmental responsible, supports the host communities and respects the human rights. BHP sustainability framework is provided below:

(Source: BHP Sustainability Report, 2017)

Scope and stakeholders of this report

The sustainability report comprises of all reporting unit BHP Group and it aligns with requirements of International Council on Mining and Metal Sustainable Development Framework. This report also makes compliance with reporting requirements of Global reporting Initiatives Standards (Brennan, 2011). The main stakeholders for whom this report is prepared are business partners, government and other regulators, labour unions, shareholders, society partners, customers and suppliers, employees and contractors, and various other associations.

The dam failure at Samarco, Brazil has released significant volume of mine tailings which is the concentrated mixture of water and non toxic mud such as mine waste. On the response of this incidence, the priority of BHP was to ensure the safety of the people and environment. After the incidence and emergency situation, BHP has carried out detailed plan to make recovery of environment and community in more strategic and structured way (BHP Sustainability Report, 2017).

Conclusion

It can be stated from the overall analysis of the articles that in the context of corporate social responsibility, legitimacy theory provides consideration on perceptions or assumptions that actions of an organization are appropriate, desirable and proper within the social and environmental constructed norms, values, beliefs and definitions. So it is very important to prepare and report on the activities performed by the company that impacts the social, environmental and economic factors of the society within which company operates. However, it has been identified that business entities are developing social and environment reports as per the pressure of theories of legitimacy only. The influence of media attention is causing the need for companies to depict positive information about their business practices in their sustainable reports for depicting that their actions are legitimate. It has been analyzed from the BHP sustainability report that the company has presented information about social and environment practices for merely showing its actions to be legitimate but has presented true and fair information about the issues it is facing to maintain sustainability.

References

BHP Sustainability Report. 2017. Sustainability Report. Retrieved September 12, 2018, from  https://www.bhp.com/-/media/documents/investors/annual-reports/2017/bhpsustainabilityreport2017.pdf

Brennan, D. 2011. Corporate Social Responsibility: The Corporate Governance of the 21st Century. Kluwer Law International.

Deegan, C. & Shelly, M. (2014). Corporate Social Responsibilities: Alternative Perspectives about the Need to Legislate. J Bus Ethics 12, pp. 499–526.

Deegan, C., Rankin, M. & Tobin, J. (2002). An examination of the corporate social and environmental disclosures of BHP from 1983?1997: A test of legitimacy theory. Accounting, Auditing & Accountability Journal 15 (3), pp. 312-343.

Merry, E. 2015. The Quiet Power of Indicators: Measuring Governance, Corruption, and Rule of Law. Cambridge University Press.

O’Donovan, G. 2001. Environmental disclosures in the annual report: Extending the applicability and predictive power of legitimacy theory. Accounting, Auditing & Accountability 15 (3), pp. 344-371.

Rao, K., Tilt, C. & Lester, L. (2012). Corporate governance and environmental reporting: an Australian study. Corporate Governance: The international journal of business in society 12 (2), pp.143-163.