Corporate Social Responsibilities of BHP Billiton Company
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This report discusses the CSR issues faced by BHP Billiton Company and provides recommendations to solve those issues. It also includes an analysis of the company's CSR program and its impact on stakeholders.
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BHP BILLITON COMPANY Corporate Social Responsibilities CSR Program and issues faced by BHP Name of the Student-
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Executive summary Each and every company needs to take proper CSR activities and comply with the all the ethical and legal requirements if it wants to grow its business on sustainable basis. The Concept of CSR is meant to allow company to give back to society what it has taken while running the business. In this report, corporate social responsibilities issues recommendation to solve those issues and way of solving the issues also along with the examples has been discussed. It will assist owners and key managerial persons of BHP Billiton Company to understand the hindrance and proper issue solving methods to mitigate these CSR issues in effective manner. This company has faced the corporate social responsibilities issues in its business due to the mishandling of hazardous substance and non-effective regulatory legal compliance. The main CSR issue has emerged as company has failed to establish harmonization in its domestic CSR policies and international CSR policies of company. In addition to this, company has also faced issue in its high employee turnover due to the non-effective employee development plan. It is also one of the biggest reasons of less complied CSR program.
Table of Contents Executive summary.....................................................................................................................................1 Introduction.................................................................................................................................................3 Description of company...........................................................................................................................3 Research methods.......................................................................................................................................4 CSR issue identified and undertaken program of BHP Billiton.....................................................................4 Evidences.....................................................................................................................................................5 Stakeholder’s impact...................................................................................................................................6 Recommendation-.......................................................................................................................................7 Legitimacy theory....................................................................................................................................7 Public relation..........................................................................................................................................7 Evaluating of theories..............................................................................................................................7 Critise of theory.......................................................................................................................................8 Recommendations.......................................................................................................................................9 Triple bottom line theory.........................................................................................................................9 Business ethics theory...........................................................................................................................10 Evaluation of theories............................................................................................................................10 Critises of theory...................................................................................................................................11 Implementation plan.............................................................................................................................12 Issues after implementation plan..............................................................................................................14 Conclusion.................................................................................................................................................14 References.................................................................................................................................................16 Appendix...................................................................................................................................................19
Introduction With the changes in ramified economic changes, every organization needs to follow proper strategic program and compliance program to mitigate the social and environmental issues. It is analyzed that organization operates its business in the society and has to manage it’s all the business operations with a view to strengthen the business functioning in effective manner. The corporate social responsibilities is also used as sustainable business, corporate governance and self-regulatory compliance program of company to strengthen its social and environmentalsafety program. In this case, BHP BillitonCompany has been taken into consideration to determine the CSR activities of the company. In many case, CSR activities have been described as business approach of the company that contribute to the sustainable business development by delivering the economic, social and environmental benefits for all of its stakeholders. In this report, through analysis of Corporate social responsibilitiesof BHP company, it has been taken which is used to maintain an effective strategic approach. In the CSR activities of the BHP Billiton Company, it is considered that company has responded to communityexpectationswithcombinationsofthepolicy’sincludingcodeofconducts sustainable development policy and other designed set of standards which conducts its business for the effective business functioning (BHP Billiton, 2016). BHP has defined its CSR policies and activities program as requirement to address risks and explicating the zero tolerance of the Misconduct act upon the child labour, issue related to forced labour, and employee development program and corruption, bribery and extortions. Description of company BHP Billiton Company is the world’s largest company which was formed in 2001 merging of the Australian Broken Hill Proprietary Company, and Billiton of the UK.The main business operation of company is related to production of ore, Manganese, Petroleum, Aluminum, Base Metals,MetallurgicalCoal,ThermalCoal,StainlessSteelresources,mineand Diamonds/Specialtymaterialsbyusingthenaturalresources(BHPBilliton,2016).
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Research methods It is analyzed that the BHP Billiton Company’s scale of diversity is related to worst ravage of the cotemporary economic downtown which negatively impacted the employees and other owners of the company. However, there are major communication channels which have been used by BHP Billiton Company such as reporting process, announcement, multimedia and media feedbacks.The issue in the global and corporate accountability arises due to the non- sustainable business practice and less effective business policy which might negatively impact the society, economic and environment at large. In this research, the main research methods are journals, articles, documents and other web news which have been used to collect the required amount of information. However, qualitative and quantitative data have been collected to determine whether the CSR activities of the company have created value to its stakeholders. CSR issue identified and undertaken program of BHP Billiton It is analyzed that business organizations hampers economic, society and environment while operating its business and in order to mitigate these issues and payback to society, CSR program and sustainable business practices are undertaken by organizations (BHP Billiton, 2016).These activities are the most suitable methods which are used to implement the strategic approach and implementing the strategic approach to manage its business. However, after assessing the annual report of company, the main issue which has emerged due to the business functioning of BHP Billiton Company is related to emergence of hazardous substances and gases which negatively impact the society and environment at large. These hazardous gas and substances emerged due to the functional program of exploiting the natural resources. It has high level of social pressure and negatively impact the environment in which people lives. It is analyzed that due to the financial crises of the business, BHP Billiton Company had to dismissal all of its six thousand employees and contractorswhich eventually negatively impact the society and environment at large. This CSR issue emerged due to the non-effective strategic program and less effective CSR policies program of company. Company adopted CSR activities withaviewtopromotebusinessaccountabilitytowiderangeofstakeholdersbesides
shareholders and investors who may have direct and indirect interest in the business organization (Kirsch, 2008). Another global CSR issue and sustainable program of company is based on the communication and responsibilities program. Company has inclined towards opting for a utilitarian, relativist interpretation of 'good and reflects the use of the relative efficiency to use the vast portfolio of extractive activities in such a way that could be hard for the organization if takes more obstructive stances.Nonetheless, company endeavored towards developing the economic and social benefits CSR activities and standards which will assist management to mitigate the negative impact of its business operations. BHP Billiton Company followed its set protocol and discharged its all the CSR activities by implementing its strategic plans and investing capital in the particular certain areas. However, after assessing the market details, it was found that BHP Billiton Company failed to manage its negative impact on the concerned society which emerged due to the excess use of iron ore and other hazardous substance (Kemp, Boele, and Brereton, 2016).The main issue of the CSR activities of the company has been emerged due to non- effective employee development program. It has reflected that company has already set up the grievance portal in its different department so that every employee could easily share their issues and problem in the process system of organization. The CSR program is the most suitable sustainable business practice which promotes each and every organization to undertake strategic activities to deliver the best outcomes to society and eliminate the negative impact of its business on society and environment for the sustainable business practice.After analyzing all the details, it could be inferred that CSR program and concern of the stakeholders should be harmoniouswhich reflects that company endeavored towards setting the harmonization for the social and economic development together (Hilson, 2011). Evidences These evidences are given to determine the CSR activities of the BHP billiton company and how the CSR activities have impacted the stakeholders. These corporate laws and applicable CSR policies should be followed by BHP Billiton Company to strengthen its CSR activities and
increasing the overall efficiency of the business. BHP Company has focused on following the CSR strategy after happening of the disaster of the town of Bento Rodrigues. This issue was the one of the most imperative trigger which forced BHP Billiton Company to set up proper CSR program in its sustainable business program. In addition to this, the CSR reporting frameworks of the BHP Billiton Company has been designed in such a way which strengthens the overall CSR program and implemented strategic approach. It focused on the rendering the corporate business benefits to society and lower down the negative impact of its business on others (O’Neill, and Deegan, 2009).It reflected that this oil spill has negatively impacted the brand image and business sustainability of the organization in long run. However, the another CSR issue which BHP Billiton Company has encountered in this business process is based on the harmonization of its domestic and international CSR policies and frameworks. It is analyzed that CSR issues and increased business complexity has divulged that company has failed to managed its CSR program and does not follow all the applicable CSR rules and regulation. In terms of financial perceptive of the company, it also has to consistently invest at least 2% of its average five year net profit which is too high and increases overall cost of its business (Haalboom, 2012). Stakeholder’s impact The main CSR issue of the BHP Billiton Company is related to their oil spills which have negative impact on the society. In the past, this company has already faced several oil spill issues and had negative impact on the environment and society at large. It has been observed that despite of its bad history of the negative impact of the Brazil oil spill case, BHP Billiton Company has faced high social and environmental issues in its business. In addition to this, the BHP Billiton Company has faced issue in adopting the triple bottom line methods in its business which may negatively impact the business cash outflow and increased business costing (Collins, 2009).After that incident of company in 2015 and 2016, it divulged in its reporting frameworks that the increased investment in its Eco-logical system process and designed may mitigate the environmental negative impact on the business.
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Recommendation- BHP Billiton should educate its stakeholders about materialistic and non-materialistic things so that they could bifurcate the policies program designed by the company for the suitable future growth and social development (White, 2017).Company may also seek to manipulate and mould perception of the others by deflecting appeal to organization authority.It strengthens the transparency of the work system and implemented strategic program of the work system to implement the code of work program (Visser, 2016). Legitimacy theory As per the legitimacy theory, it is analyzed that company has been indulged in the production andhandlingofthehazardoussubstancewhichmaynegativelyimpactthesocietyand environment. BHP Billiton Company has been indulged in oil, petroleum and mining program which requires utmost care and good handling otherwise it may negatively impact the society and environment at large. Public relation This theory focuses on the public relation. The public relation theory is followed to strengthen the positive outcomes to society and lower down the negative impact of the business. This level of strategic program adopted and its less effective CSR program have reflected that company needs to arrange proper functional program to strengthen its CSR activities program in its business. The public relation is also one of the major concern of the company which assists in strengthen the transparency and reporting framework of organization. Evaluating of theories These different theories have been adopted to make the business practice of company more effective and clients oriented. BHP Billiton Company has adopted international CSR reportingframeworkstostrengthenitsCSRprogram.Thepublicrelationprogramand transparency of its business and financial transactions are highly based on the CSR reporting frameworks and international harmonized framework. The Eco system support installed by company is done to improve its eco-management program and improving the overall social and development supporting program.These all the identified issues have reflected that BHP
Billiton Company needs to manage its business effectively and CSR program and effective compliance program is also required to strengthen its business in long run (Jones, Marshall, and Mitchell, 2007).It is analyzed that BHP Billiton company has perceived the legitimacy theory and in order to strengthen its CSR policies, it has to adopt of the several strategies and corporate governance program (Kemp, 2009). Critise of theory Company needs to implement the level of legitimacy theory which will ensure the arraignment of the institutional level which might positively impact the corporate governance practice of company in long run (Ross, 2017). Source:(Bair, and Palpacuer, 2015) The non-effective legal and ethical compliance issues faced by company have reflected that company needs to follow the proper work practice and implement the strategic program. These practices not only strengthen the regulatory compliance of company but also increase the overall regulatory requirement compliance on international level as well. After analyzing all these details, it could be inferred that BHP Billiton Company indulged in handling hazardous
substance and mineral which if not taken properly under care then it might negatively impact the people and environment at large.Minas Gerais state environmental prosecutor has also declared that company has failed to comply with eh applicable CSR program and rendered its business non-effective. In addition to this, BHP Billiton company needs to manage its compliance departmentthat willassist organizationto complywith the allthe applicablerulesand regulations in long run (Haufler, 2016). Recommendations BHP Billiton Company should follow government policies and stakeholder’s oriented busienss development.As per the report given by United States Securities and Exchange Commission after Cambodia's Minister for Water Resources in its investigation, it was found that AUD $ 2.5 million of capital payment was made by company to government for the social and economic development of society (Narula,Magray, and Desore, 2017).This capital was invested with a view to help people who got hurt by its oil spills case in Brazil. In addition to this, the new program and eco system adopted by BHP Billiton company has reflected that company has complied with its all the applicable regulations and laws with a view to strengthen the corporate social responsibilities. The CSR reporting frameworks and adopted business policies program have reflected that company has set up strong public relation policy which strengthen the CSR activities and social development plan of company (Bluszcz, and Kijewska, 2015). Triple bottom line theory Triple bottom line theory is used to strengthen the benefits to people, planet and planet. BHP Billiton Company should follow these theories to mitigate the negative impact on the society from tis business. The other issue have emerged due to the non-effective organizational culture of organizationwhich may negatively impactemployee’swork functioning. It is analyzed that company needs to comply with the employee’s code of conduct and set ethical standards to promote the employees and motivate them to render best level of operational services. It also must have followed the safe and secure health care work program for its employees as well. The increased labour turnover in BHP Billiton Company will not only increase the overall business costing of the organization but also lower down the return on
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capital employed. It has reflected that company should maintain the effective CSR policies and design its organizational culture to render best possible benefits to employees.It is the CSR theory which allows company to align its interest with its main three objectives named, people, planet and profit. BHP Billiton needs to strengthen its business activities with a view to increase the overall output and efficiency of its busienss at large. Business ethics theory Business ethics theory is used to make the busienss more sustainable and operate the work process more stakeholders oriented. The theory of organizational management and business ethics addresses moral and values in managing an organization to manage its corporate social responsibilities. As per this theory, company needs to align the interest of its stakeholders with the organization’s development. All the CSR activities and eco-sport plans have been used by BHP Billiton to strengthen the safety options available to stakeholders form the negative impact of its business functioning. In the CSR reporting issues, it is observed that The CSR Disclosure Company has included the essence of legitimacy theory which arises due to the increased disaster of town of Bento Rodrigues, government authority allegation on the company. This case washappenedduetotheincreasedregulatorycomplianceprogramandnon-effective environmental procedural work. However, Minas Gerais state environmental prosecutor declared the incident as mistake of its board of directors which emerged due to its failure to meet legal and ethical compliance (Haufler, 2016). Evaluation of theories Thesetheorieshavesuggestedhoworganizationafterimplementingthesetheoriescould strengthen the overall outcomes and positive impact on stakeholders. This theory reflects that if organization handled hazardous substance then it will have to strengthen its rules and regulation for its reporting disclosure program The consideration of company for its other business factors such as the key health, safety, environment, community and socio- economic risk of the business are also reflecting that company strictly needs to follow the proper social and economic development program to strengthen its business policies.It has used several methods to ensure its legal and ethical compliance with its CSR policies and regulations which includes assessment program related to its UN global work program and reporting initiative on international level.
Company has invested its capital in the community project plans and recording of the community contribution which will be used for the UN spending projects and developing effective policies program (White, 2017).These CSR issues have emerged as company has failed to invest its capital in the CSR compliance program and there is no internal control system which company could have used to mitigate the negative impact of its business on the society and environment at large. It has been observed that BHP Billiton Company has to harmonize its international CSR rules and regulations with its domestic regulatory compliance to strengthen its CSR program. This will not only strengthen its business brand image on international level but also keep its business sustainable. BHP Billiton needs to invest at least 5% of its average five year net profit in its CSR activities to compensate the negative impact of its business on the society and environment at large (Carter, 2015). Critises of theory The failure to achieve this triple bottom line approach,in the latest case of the Brazil dam failure, it was found that many of the employees were having the confidential information regarding the fact that the dam will fail. However, due to their personal profit they instead of sharing the information with the stakeholder kept it confidential. This employee issue was emergeddue to non-availability of the platform for its employees to share the required information with its employees and resulted to destruction of its process system (Mayes, McDonald, and Pini, 2014). Therefore, aligning the interest of its organization with the society is very much required to mitigate these sorts of issues.The business operations of company are required to identify and manage health and wellbeing risks which will assist in meeting its targets on quarterly basis (Gamu, and Dauvergne, 2018). It should also manage its organizational culture to keep its employees motivated. BHP Billiton Company’s scale of diversity is related to worst ravage of the cotemporary economic downtown which negatively impacted the employees and other owners of the company. Therefore, organization needs to set up proper development scale to manage the business effectively (Haufler, 2016).
Company needs to set up strong code of conduct and regulatory compliance program which will strengthenitsCSR policiesand strengthentheoverallpositiveoutcomestosocietyand environment (BHP Billiton, 2016). Implementation plan The implementation plan provides how Kotter theory could be used to set up an effective CSR program to mitigate the negative impact of busienss operation on society. The implementation plan focuses on reducing the negative impact of busienss operation of BHP on the society. The negative issue of the CSR activities program and global sustainable CSR practice of company is related to its financial capital sources. Company had to face high cost of capital in its business due to the high cash outflow in setting up the eco-system and implementing the CSR activities program. It has shown that company has to suffer due to the high costing of its CSR activities. In addition to this, increased cost of its CSR activities may also impact the sustainable business practice of company in long run (Fisher, and Grant, 2012). The Kotter theory provides 8 steps which focuses on creating, building, form, enlist, enable, generate sustain and institute the medium to mitigate these CSR issues. Creating-Employees of the company should be allowed to enter into the general meeting so that they could share their experience and personal undertaken program with the key managerial person. It will not only assist in implementing the strategic approach but also eliminate environment and social issues in effective manner.The setting up of the targets and CSR compliance program mandatory in every project of the BHP Billiton Company such as petroleum extraction and mineral projects, it could easily eliminate the social and environmental issues of business (Carter, 2015). Building- BHP Billiton Company needs to takes its key takeaways, lessons learnt such as visible leadership program, mental health corporate program, leveraging the existing programs and implementation of the process learn program for the effective implementation of the organization growth and employee development (Gamu, and Dauvergne, 2018).
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Form- After collecting data related to employees of the BHP Billiton Company, it is analyzed that many of the employee have faced criminal charges and issues on the Brazil dam disaster. It showed that many of the employees were having the confidential information which could have savedthehappeneddisaster.Itwasemergedduetothelackoftransparencyfromthe organization side to its stakeholders (Carter, 2015).Employees have divulged that four aspects such as culture, capacity, prevention and recovery are the major aspect of their development and growth. Company has faced these issues and resulted to negative impact on its brand image on international level (Gamu, and Dauvergne, 2018). The main impact of CSR activities is based on the transparency and increased sustainability of the business of company. It has provided long term benefits to stakeholders in long run. Enlist-It also needs to implement the flexible approach in its value chain activities which will strengthen work culture and organization development with the proper motivation of employees. It could also set up internal control system to set up the emission marks for its hazardous substance and negative impact of its oil and petrol substance on people in society. If company crosses the certain marks then the internal control system will take the appropriate actions to mitigate these issues. Enable- The CSR reporting of the BHP Billiton Company should be based on the consideration of the key health, safety, community and feedback with regard to its issues of materiality to continuity to improve reporting standards.It should have aligned its CSR reporting standards and frameworks on the basis of progress assessment on its performance in relation to its UN global compact principles and global reporting initiative which assists in delivering the required intents in the business operations of the organization (Bluszcz, and Kijewska, 2015). Generate- Company is required to invest its capital in community projects to promote its stakeholder who directly and indirectly get impacted by the undertaken subjects. Afterward, the community capital will be spent against the UN Millennium Development Goals for the measurable tangible progress.BHP also needs to ensure that provision of the safety program and implement the effective hazardous substance and implement the effective environment of organization.
Sustain- It is inevitable that organization like BHP Billiton indulged in handling hazardous substance like petrol and oil will never be accepted in the society. However, by using the impact of its CSR activities related to health and safety for its stakeholders will assist company to eliminate the possible issues and negative impact on the society at large (Blowfield, Karam, and Jamali, 2017). Institute- Company should boast of strong reputation and has opportunities to enhance the contribution towards the safe renewable environment which will also assists other companies to follow the same code of conducts and CSR Policies (BHP Billiton, 2016). Many of the rivals in the petrol and oil industries are using the eco-support system in its business which has been playing a pivotal role in eliminating the negative impact of their business functioning on the environment and society. Company needs to arrange proper stakeholder’s engagement program to meet its stakeholders demand and expectation. It is required to establish the nexus between the organizational development and stakeholder’s growth on international level. Company should set up proper set of policies and sustainable business program and implemented strategic approach which will helps in effective engagement of business practice program. Issues after implementation plan BHP Billiton Company should eliminate the gap between the stakeholder’s goals and value by implementing the effective CSR activities program which starts from the workplace harassment to environment related issues (Bair, and Palpacuer, 2015).This level of strategic approach assists in eliminating the employee turnover issue and assist organization to improve its existing business performance to its strategic level. It will also promote the stakeholders to growth with the development of organization.BHP Billiton Company has implemented its mental wellness standards as supporting program for its employees. This program is suggested to lower down the stress and mental issues have faced by employees in their working (Albert, Werhane, and Rolph, 2014). Conclusion After analyzing all the details and case study of the BHP Billiton, it is analyzed that company has faced several CSR issues in its business. However, the main issues which company
has faced is related to its increased employee turnover and negative impact of its hazardous substance such as petrol, oil and other things which have direct and indirect negative impact on the society at large. It has shown that company has strengthened its CSR policies by adopting the international Code of conduct and setting up harmonization in its domestic and international CSR policies. In addition to this, internal control system and target breach in its value chain activities have also strengthen its CSR program in its business functioning. Company has also initiated to invest at least 2% of its average five year net profit in its community services which will be indulge din serving for the benefits of the stakeholder and society on international level. It has also set up its factories in the particular selected areas which will lower down the negative impact on the society and environment. Now in the end, it could be inferred that every organization needs to adopt the proper CSR program and implemented strategies which will strengthen the employee functioning and assists in motivating them for the better results.
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