Corporate Sustainability Reporting and CSR in Mining Industry

This article discusses the importance of Corporate Sustainability Reporting and CSR in the mining industry. It provides a comparative analysis of two companies listed on Australian Securities Exchange (ASX) and their CSR policies. The article also highlights the pressure faced by mining operators to comply with CSR objectives and the consequences of non-compliance.

CORPORATE ACCOUNTING

Contents
ABSTRACT...............................................................................................................................2
INTRODUCTION......................................................................................................................3
COMPARATIVE ANALYSIS..................................................................................................5
OVERVIEW OF THE COMPANIES.......................................................................................5
PRESSURE OF CSR REPORTING ON MINING INDUSTRY..............................................6
COMPARISON..........................................................................................................................7
CONCLUSION..........................................................................................................................9
Bibliography.............................................................................................................................10

ABSTRACT
CSR, now-a-days, have became one of the most significant issues in organizations. Different
entities have different CSR policies which give a clear picture of their operations that are
considered to involve their social responsibility. It is important for businesses to understand
the importance of their decisions that equally have an impact on their stakeholders who has
invested their trust in such businesses. Therefore, such information cannot be derived solely
from financial information. It needs a clear assessment of all the related risks and
opportunities, that is, non-financial information. CSR reports are aimed at providing
maximum transparency as that leads to better decisions which helps in developing trust
between businesses and its stakeholders.

INTRODUCTION
Corporate Sustainability Reporting is the reporting on a company’s social, environmental and
operational activities that involve both quantitative and non-quantitative information that are
important to be disclosed to the key stakeholders whether external or internal and its ability to
deal with the risks arising. The principles followed while reporting for corporate
sustainability is those of Global Reporting Initiatives (GRI). Organizations are required to
measure their environmental and social performance and account for it accurately. (Atkinson,
2012)
Non-financial information may be presented in different formats whether in sustainability
reports or annual reports. The GRI principles helps the businesses and governments to
account for their activities that has an effect on the environmental, social and sustainability
issues effectively and disclose to the public. The GRI standards is heading towards
management of sustainability and disclosing of general information. For the purpose of
providing highly qualitative and quantitative information which are important to be disclosed
for a reporting entity, reports are to be prepared there are three Universal Standards:
 GRI 101 : This forms the ‘foundation’ of the report that indicates using of GRI
standards.
 GRI 102 : This involves the presentation of ‘general disclosures’ that is used to
account for contextual information about an entity.
 GRI 103 : This is the ‘Management Approach’ that is how the disclosures are to be
made regarding the impact on the environmental and social issues.
Similarly, Corporate Governance refers to a set of guidelines and practices and processes
by which an entity is being guided and controlled. It concentrates on fulfilling the needs
of different external and internal stakeholders. Corporate governance revolves from an
entity’s objectives to its action plans and controls that are taken into consideration for
measuring performance and for making corporate disclosures.

COMPARATIVE ANALYSIS
For the purpose of corporate reporting on sustainability, we can undertake a comparative
analysis of two companies listed on Australian Securities Exchange (ASX). Let’s take two
companies working in the same sector called mining sector, that is, Sandfire Resources NL
and BHP Billiton Limited. (Berry, 2009)
OVERVIEW OF THE COMPANIES
Sandfire Resources NL is an Australian company involved in the exploration and mining of
minerals and is a leading producer of copper. It owns DeGrussa Copper-Gold Mine that
produces highly qualitative copper. Its movement from drilling, development, financing and
construction activities to production of copper within 3 years has been considered as an
remarkable achievement. Such achievements set as a benchmark for other companies
involved in the resources sector in Western Australia. It aims at producing the most
qualitative resources which are capable of generating substantial returns so as to deliver
maximum satisfaction to its stakeholders. (Boyd, 2013)
On the other hand, BHP Billiton Limited is one of the leading resources company in the
world. It is involved in extraction and production of minerals with around 60,000 employees
and works mostly in Americas and Australia with headquarters at Melbourne. Its main
resources include copper, iron-ore, coal and petroleum. It is considered as the largest
producer of aluminium, copper, metallurgical coal and iron-ore. It is also involved in
extraction and mining of energy coal, oil and gas. It aims at its long term goals that states
maximum shareholder value through exploration, processing, developing and marketing of
natural resources. (Seal, 2012)

PRESSURE OF CSR REPORTING ON MINING INDUSTRY
CSR has now been a significant issue in the mining and resources sector. Mining operators
might want their companies to not comply with CSR issues but such an idea could hurt the
company’s reputation in the long run. If a company falls into the trap of not complying with
CSR obligations, it could take years for it to escape from such fallout. Also, such a trap could
act as a threat to the company’s reputation which could create severe situations for the
company to earn back that trust from its stakeholders. (Dash, 2016)
For mining operators, the key focus should be on the environment where issues such as
climate change, pollution are concerned and that is why, mining industry faces a lot of
pressure from the environmentalists, activists and various other bodies providing public
services such as NGOs and government legislation. Another issue faced by such operators is
frequent global expansion as the lands discovered for expansion might be claimed by a large
population. Where the mining industry is expected to meet its sustainability standards, it is
also important for them to consider whether their third parties such as contractors comply
with the CSR compliances or not as a slightly incompliance could drag a company into
severe situations. (Datar M. S., 2015)Therefore, it is important for mining operators to
comply with CSR objectives so as to enjoy a better status in the industry and be preferred
more than its competitors. Thus, we can conclude that mining industry faces alot of pressure
and therefore, the sustainability reports prepared by such operators are just not public relation
exercises as anything found fraudulent in it would be a company’s loss.

COMPARISON
Both BHP and Sandfire report have been prepared according to the guidelines of Global
Reporting Initiative (GRI) principles. In both the reports, we found that the companies
regularly conduct meetings with its stakeholders so as to understand the key sustainable
issues. However, on comparison we found that BHP’s Sustainability Report is better than
Sandfire’s report in terms of quality and quantity. Let us understanding this through one the
reporting and accounting of one of the key CSR objectives that is ensuring health and safety
to its employees. When we see BHP’s report, its matter of discussion is divided into sections,
that is, our approach and our performance. ‘Our Approach’ states the risks & issues faced
such as injuries caught, their approach towards such issues such as regular medical scrutiny
and the activities they are undertaking such as gym facilities, providing healthy food,
vaccinations etc whereas ‘Our Performance’ states the quantitative figures with graphs giving
a clear understanding of improvement/disimprovements. (Girard, 2014) For instance, BHP
has been able to reduce occupational health exposures to carcinogens and airborne pollutants
by 76% against a commitment of reducing it by 10% by 30th June,2017 through the
introduction of new technologies. However, the occupational illness among employees is
4.92 per million hours worked in FY2017 which is like 18% more than FY2016 and in
contractors, it is 1.43 per million hours worked which is like 23% more than previous year.
Coming to Sandfire report, under the same topic, the report do contains the principal hazards
in terms of fatal risks. But, it seems like the company talks more about its vision and mission
such as what we look forward for, what we ensure, etc. The activities undertaken are like
awareness programmes, supervisor’s reviews, etc. Where its principal hazards includes fire
hazards, explosives, chemicals usage in certain places, etc its injuries include sprains, manual
handling, strains, lacerations and fractures. (Robert Parrino, 2013)Where mining companies
involve injuries like hearing loss, skin diseases, silicosis, etc it is strange that Sandfire
accounts for such minor injuries. Coming to qualitative information, Sandfire reports for no
fatalities or illness or injuries in FY2017. The company’s TRIFR (total recordable injury
frequency rate) per million hours worked has reduced from 7.08 in FY2016 to 5.
While Trif in BHP is 4.2 per million hours worked in FY 2017 which shows an improvement
of 2%as compared to previous year and 9 %improvement over 5 years.

The reports are to be prepared with accurate measurements that are measured against some
benchmark such as in BHP, the benchmark is set with its previous year’s results whereas
detailed measured information could not be found in Sandfire. For example, “Overall our
safety performance has improved year on year”. Such a statement could have been explained
in more quantities terms and graphically as well. We also discovered that in case of Sandfire,
the positive results are highlighted in the beginning of the discussion whereas such highlights
are not found in BHP. (Ihlen, 2009) Overall, in case of Sandfire, we will find its
achievements and other social initiatives it took towards the society whereas in case of BHP,
we find each and every concern discussed thoroughly in terms of both quality and quantity
and graphically as well. Thus, we get a feeling of transparency more in BHP’s report than
Sandfire.

CONCLUSION
It is difficult to conclude about whether the two reports can be trusted to serve the good as
such decisions can be made after a better analysis of all other related reports. Also, where the
operations are large scale (BHP in our case), it is obvious to expect more risk as compared to
company having low scale operations (Sandfire in our case).
Considering the current scenario, it is expected to visualize the gaining importance of CSR
reporting for an organization because as per researches, for a business to survive in the long
run, it is important for it to keep its stakeholders happy. Growth would come not only from
its effective and efficient operations but also from the satisfaction of its stakeholders.

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