BHP Billiton's Sustainability Accounting & Reporting

This report sheds light on BHP Billiton's approach towards managing climate change issues and achieving sustainability. It discusses the role of accounting academics in this field and highlights the company's management strategies. The report also emphasizes the importance of stakeholder analysis and the need for organizations to prioritize both economic growth and climate change management.

BHP BILLITON
SUSTAINABILITY ACCOUNTING & REPORTING

Sustainability
1. Summary and insights
It can be observed from the article that there are significant opportunities and challenges
concerning climate change, emission reduction, assurance and reporting, accounting, and
greenhouse gas emissions into the atmosphere. Nevertheless, in the current scenario, auditing
and accounting for issues like GHG and carbon emissions has become enormously
challenging because of uncertainties that exist in estimation methods. As the adequacy of
present formulation of policies to stop such emissions is inappropriate in nature, this is the
reason why implications have been raised for all nations, sectors, organizations, and
individuals through this article. Besides, the methodology adopted assists in overviewing the
climate change issues together with an extensive collection of inter-disciplinary and
independent contributions to accounting for such change of climate. Furthermore, the
methodology of shadow carbon account and accounting analysis assists in shedding light on
how nations and organizations are responsible for and communicate their GHG emissions and
behavior. Based on the current findings, it is observable that the policies to stop or curb
emissions is ineffective in nature and therefore, such challenge is expected to increase on a
wider scale in the upcoming future if corrective actions are not implemented. The article also
evaluates the significance betwixt research of social and environmental accounting of
interdisciplinary viewpoints. Further, with the help of Air New Zealand organization, the
article scrutinizes the complexities, challenges, and uncertainties associated with accounting
for GHG and carbon emissions. Nonetheless, a series of questions are raised through this
article on the effectiveness of offsetting and feasibilities for timely reducing the emissions 9
Milne & Grubnic, 2011). Therefore, the aim of this article is not to seek a reduction of all
climate-change based research of accounting to evaluations of corporate carbon footprints.
However, even if it did, various interesting and different methods to encounter such issues are
also prevalent. In simple words, the article intends to frame an agenda for future research that
remains different and interesting as a whole (Milne & Grubnic, 2011).
2. Engagement of accounting academics in climate change issues
Accounting academics are increasingly moving beyond traditional zones of tax, finance,
auditing, and accounting services. Such academics possess the ability to assist clients, sectors,
nation, and organizations to identify significant areas of problem in relation to climate change
and recommend opportunities for improvement of profitability and reduction of costs (Milne
& Grubnic, 2011). More than simply reducing costs, attaining sustainability is a significant
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target for companies given their liability to deliver long-term value and sustain risks for the
interests of all stakeholders. In relation to this, the risk management and core analytical skills
of accounting academics can be taken into account to understand the practical and strategical
implications of a reduction in emissions of GHG or carbon, thereby facilitating in the
achievement of sustainable business practices (Milne & Grubnic, 2011). Senior management
may fail to identify the relevance of energy as a material business cost but accounting
academics can play a role in illustrating a compelling business case that can capture the
return on investment (ROI). Further, by combining business and energy data and translating
these into economical metrics can influence the stakeholders in an organization. This is the
reason why accountants in many organizations act as a bridge betwixt people liable for
driving sustainability and the management team as a whole. Moreover, such additional
efficacies come on top of savings of energy cost, enhancing the bottom line of the business.
Accounting academics can play a key role in utilizing their insight into financial metrics to
assist clients to capitalize on financial gains (Milne & Grubnic, 2011). Nowadays accountants
are also engaged in offering valuable advice to companies on seeking the optimum position
of tax for the green projects, government incentive strategies, and reporting and measurement
of carbon emissions. Besides, this has become an EU-wide necessity for larger firms.
Therefore, accounting academics must engage in climate change accounting research.
3. BHP Billiton’s management of climate change issues
BHP Billiton supplies energy and mineral commodities that are vital for its economic growth.
The products in the company’s portfolio require emissions of GHG and carbon into the
atmosphere. However, in relation to the management of climate change issues, the company
has an integrated and comprehensive approach to prepare for all risks that climate change
poses to it and further actions are also being taken to deliver an efficient international
response (Milne & Grubnic, 2011). It is also adapting to impacts in climate change by
building resilience to the same. Furthermore, the company is also accelerating the
deployment and development of low-emissions technology as a major response for
management of climate change issues. Moreover, BHP is also operating with others to
increase the international response to issues of climate change. Effective evaluation of
climate science is vital for the purpose of planning. BHP collaborated with CSIRO to obtain
regional analyses of climate science. Therefore, it can be witnessed from the activity that the
climate resilience planning is being undertaken as it will help in understanding of the
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vulnerabilities of the climate. The major response will rests upon the lifetime of the asset and
exposure to climatic factors and the critical function.
Context
BHP has also released its climate change portfolio analysis report that sheds light into its
scenario planning strategy that includes significant portfolio implications of a transition to
two-degree Celsius world wherein the international average temperature enhancement stays
below such scale relative to pre-industrial stages. In order to manage climate change issues,
the company has also accepted IPCC (Intergovernmental Panel on Climate Change)
evaluation of climate change science. In relation to the same, the company is focused on
sustainable development in order to reduce GHG emissions and improve the efficiency of
energy.
Aims and objectives
This report intends to shed light upon the key issues that exist in the field of climate change
and problems encountered by organizations to manage such issues in order to attain
sustainability. Further, this report purposes to highlight the responsibilities of an organization
towards its society and stakeholders so that they are taken well care of. Besides, it is also
highlighted that even though world must possess the twin objectives of restricting climate
change to lower ends of IPCC emission situations in line with global agreements while
offering affordable and reliable energy to assist economic development, yet no organization
must prioritize one objective over the other.
Theoretical perspective
In the past, BHP Billiton had encountered severe issues in managing climate change issues
and as a result, it had to suffer massively. From the perspective of normative-stakeholder
theory, if the company had conducted adequate stakeholder analysis as a response to
management of climate change issues, it would not have captured worldwide media attention.
Besides, the company failed to understand that their actions could pose a direct influence on
its stakeholders. The most basic significance of this perspective is that organizations must be
well aware of the fact that stakeholders have a possession of normative power even by the
powerless (Milne & Grubnic, 2011). This means that without identifying the needs of
stakeholders, an organization cannot progress further. Moreover, in relation to public
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relations, this theory plays a significant role because it gives rise to clear ethical or moral
obligations.
Research methods and contribution
For the purpose of this report, secondary or desk research methods have been adopted in
order to gather additional information from the website, financial statements, and other
research articles. From the annual report and website of the company, details of its
management of climate change issues have been attained that contributes to further body of
knowledge. This report intends to shed light on the fact that organizations must not deviate
from their path of becoming the top company but they must also look after their stakeholders
and society in order to become one. Moreover, issues of climate change pose a big threat to
the environment and if effective strategies or corrective actions are not taken at the earliest,
future generations will surely have to survive. Hence, this report can be taken into account for
scrutinizing the strategies that can be adopted to fight climate change issues.
The research method and contribution will help in:
 Climate portfolio analysis
 Sustainable development
 Evaluation of the strategies.
4. Alignment with interesting and different characteristics
In relation to the aforesaid report, attributes like values, understanding, fear about a change of
climate, etc have been reflected. Furthermore, the strategies or approaches of the
management of BHP in response to climate change issues is also depicted in the report.
Moreover, approaches like IPCC have been provided through this report, which every
organization can accept in encountering climate change issues. Nevertheless, many
organizations that prioritize development of economic growth over management of climate
change must keep in mind that price on carbon must be implemented in a way that can not
only address competitive concerns but also attain low-cost emission reductions. Moreover,
not every company releases its climate change portfolio analysis report to its stakeholders so
that they can overview the company scenario directly. This highlights the fact that the
company is well aware of transparency measures across all parts of its business as there will
be a time when the contribution of the entire workforce may be required in order to sustain
risks and plan ahead for the future (Milne & Grubnic, 2011). Furthermore, BHP’s voluntary
involvement with its stakeholder’s sheds light on the fact that it is aware of their importance
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as they can easily influence decision-making. In addition, it is also observable that BHP
Billiton’s approach towards portfolio planning and investment decisions is robust in nature.
Nonetheless, the approaches adopted by it proves that it is well-placed to react to risks and
opportunities coming in its way.
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References
Milne, M.J & Grubnic, S 2011, ‘Climate Change Accounting Research: Keeping it interesting
and different’, Accounting, Auditing and Accountability Journal vol. 24, No.8, pp.948-977.
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