Importance of Sustainability Reporting: A Critical Review and Evaluation of BHP Billiton's Sustainability Report for 2017

Financial Accounting
Semester 2-2018 – ASSIGNMENT
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Introduction
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.
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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).
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Evaluation
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).
Research Paper 2: Corporate Governance and Environmental Reporting: an Australian study
Summary
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
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