Sustainability and Environmental Reporting: A Critical Review

This report provides a critical review of sustainability and environmental reporting through case studies and a study of BHP. It includes papers on tailing storage facilities, corporate social responsibility, legitimacy theory, and a multinational gas company. The report analyzes the various aspects of sustainability and corporate social responsibility and how companies are making efforts to meet their social responsibilities. It also examines whether companies are making proper disclosures about the same as required by law and business charter. The report is relevant for students, experts, business corporations, and non-profit organizations.

Finance Assignment

1
By student name
Professor
University
Date: 25 April 2018.
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Contents
Introduction and Background......................................................................................................................3
Critical Review on Sustainability through case studies................................................................................4
Paper 1 : A case of Tailing Storage Facilities............................................................................................4
Paper 2: Corporate Social Responsibilities: Alternative Perspectives About the Need to Legislate.........5
Paper 3: A test Of Legitimacy Theory.......................................................................................................6
Paper 4: A study Of a Multinational Gas Company..................................................................................7
Critical Review on BHP.................................................................................................................................8
References.................................................................................................................................................10
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Introduction and Background
In the given assignment, a report has been prepared on the topic of sustainability and
environmental reporting. In the first section, the critical review of the sustainability has been
done using some of the case studies like Legitimacy Theory, the study on multinational gas
company, alternative perspectives to the need of statute on the corporate social responsibility. In
the second section of the report, the sustainability report of one of the listed companies, BHP
Billiton has been studied to understand the various aspects of sustainability and corporate social
responsibility and how the companies are making putting in efforts and making reforms to meet
their social responsibilities. It has also been analysed that whether the company has made the
proper disclosures about the same as the law and business charter demands the same to be a part
of public reporting. It has been particularly seen off late that the companies involved in mining
business are very transparent in this aspect as it forms a part of the Global Reporting Initiative
(GRI) Reporting. Therefore, the companies disclose all the social, environmental and economic
aspects in relation to the same.
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Critical Review on Sustainability through case studies
Paper 1 : A case of Tailing Storage Facilities
The major point of discussion is that whether mining is possible in the way that gives the
minimum negative environmental impacts as well as take responsibility at the same time be
protective towards the livelihood of the local community. As per the author, this matter is
significant as most of the time, mining related disaster occurs due to the tailings storage
facilities, or TSFs as they are usually called (Belton, 2017). The author wants to take the help of
data so that it is easy to understand by common people. Here we have taken the help of three
mines to understand the issues associated with TSF. From the critical analysis, we can
understand why McLaughlin achieve their goals and why the other two failed. However, the
major thing that the society can observe that in many cases the reason behind such type of
disasters are political and not technical. Sometime theses disaster in place cause to social
disaster, which highly influence the social and economic condition and it, is not easy to quantify
the impact of disaster on the society. Apart from this, there are many other component that lead
to social disaster include deviations from the design approved by the Ministry Of energy and
Mines, and negligent and inefficient supervision and regulatory monitor, poor analysis of
geotechnical factors, below standard design model of tailings beach and tailings dam (Alexander,
2016). The paper also cover the question regarding the engineering aspect relating the disaster
management. The author also indicates some other scientific and innovative engineering
techniques, which helps to minimise the social and economic impact of mining and safeguard the
society as whole.
From the in depth evolution of paper one crucial question that comes in the mind of author is
“the case of tailing storage facilities”, which highly affect the environment. However, it is not a
new question that arises in the given scenario every time we need to examine the environmental
impact of this type of operation like mining (Bizfluent, 2017). The major task is here we need to
understand the cornerstone of paper. In the given circumstances, the author behaves like other
environmentalists, columnists and pseudo intellectuals who provide basic level work in place of
preaching and providing lip service. However, at the some situations the author followed
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aggressive approach as if the author studies the each component that effecting the environment
as well as the society as a whole (Bromwich & Scapens, 2016). This discussion is not also
beneficial for the students who are working in this field but also for the companies, every
individual person, the legislative and the regulatory parties who directly or indirectly involved in
mining industry work. As the text are extensive and lucid the evidence supporting the text are
also very powerful and reliable. The evidence have been evaluated in monetary terms, which
helps to make it more persuasive and conclusive. The conclusions reached are not final as it
opens a lot of other areas and theories where further discussion is required. So on the basis of
above discussion the company can take concrete step to reduce the negative impact of mining on
society (Werner, 2017).
Paper 2: Corporate Social Responsibilities: Alternative Perspectives About the
Need to Legislate
The main question that the paper “Corporate Social Responsibilities: Alternative Perspectives
About the Need to Legislate” proposes to answer is whether whether corporate accountability
and corporate social responsibility shall be developed and determined by some regulatory body
or it should be defined by the currently operating varied market forces. To answer the given
question, the opinion and thoughts of various people, organizations, companies and communities
have been included as to whether or not there is a requirement of a new and separate statute
altogether. The paper also discusses of what is currently stated in the statute and laws and
legislations and what additional things needs to be added (Dumay & Baard, 2017).
As per trend different communities or sector, different people of the economy analyse thing
differently and respond accordingly. They evaluate the situation, which would be most beneficial
to them and would protect their interests in state of welfare of society as a whole. However, the
business fraternity was in support of this proposal, which excludes any regulatory body or
institution, the individuals, and the social organizations were of the opinion that it should be
regulated as per rules and regulation (Choy, 2018).
The relevance of this approach can be scanned from the large number of responses that the
Parliamentary Joint Committee on Corporations and Financial Services were received on on the
inquiry. The responses mainly came from various group of society consumer associations,
employee groups, government organizations and individuals, business houses, associations,
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professional bodies, Accounting firms, non-government organizations (NGOs). Out of total 130
responses, the maximum number of response came from individual who are in favour of the need
of greater investor protection legislations. 36 responses came from this group, which involve the
social and environmental organizations who made 30 responses.
From the technical aspect the report all the information and discloses every matter that are
crucial. Here the author followed the research based writing approach where each submission
read out in depth to reach a conclusion. Sometimes in case of complex matter, the submission is
drafted in tabular form for giving a quick view to the readers and for easy understanding of each
component without any ambiguity. The analysis of responses are very logical and to the point
who helps in reducing the chance of misinterpretation or formation of a wrong opinion or
unrealistic conclusion (Chron, 2017). The whole matter is significantly distributed in three
sections like research method, results, consistency and summary each section explaining to
different aspects. However, there is lack in the conclusion part. Since the paper is based on
alternative prospective where each group of community consider the things in their favourable
term hence it’s a bit difficult to reach at a final and effective conclusion. However, according to
me would be beneficial for the students who are working in this field or the person who is
wanted to know the concept and operation relating to corporate social responsibilities. Other
people like experts, business corporations, and non-profit organizations would also use this
approach but the only limitation is the scope for them will be very limited.
Paper 3: A test Of Legitimacy Theory
This paper on “a test of legitimacy theory” primarily raises the question on the use and execution
of the legitimacy theory in making disclosures of relevant information in the financial statements
on annual basis. It help to understand the link between the risk associated with the environment
and method adopted to reduce the risk to the acceptable low level and the tactic adopted to
maintain, gain or repair the legitimacy (Dichev, 2017). The paper also conclude that disclosure
of all relevant information in the annual report is the way to communicate all significant matter
with stakeholder of the companies. Hence, in recent day all the companies discloses their social
and environmental information voluntarily in their annual report to aware the stakeholder
regarding the performance of the company. Because of that stakeholder aware of such incident,
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step taken by the company and the ultimate impact of those steps on the position of company as
well as whether those steps are in the interest of stakeholders or not. The significance of
environmental information is increasing day by day hence many large companies have also
initiated the task of preparation of standalone reports, primarily disclose environmental
information. After considering the various prospective one thing that is cleared that the
disclosure of information depends upon the relevance of information (Trieu, 2017). As per my
opinion, annual report is an obvious place to make environmental disclosure, the matter that
require special attention. However, there are some other way to disclose information are media
release and advertisements.
Judging from the technical aspect, the text trying to shift the focus in a new area of discussion.
The relevance of discussing legitimacy theory is increasing day by day helping in economic
development and industrialization. One interesting thing about the link of legitimacy theory is
like other social theory like stakeholder theory, accountability theory and political economic
theory that makes the theory easier to understand. With the help of fact and figure, it is easy to
explain the interplay of societal; expectations and the business entity’s actions. The author taken
reference of other author for making it diverse. This tactic also helps in dealing some real life
problem and in decision-making process (Linden & Freeman, 2017). Here to gather information
the author interviewing six senior managers, belonging to three large Australian companies,
deemed suitable for this purpose. However, these were very extensive; involve lot of matter,
which have a massive effect on decision. The noteworthy feature of this theory is here at each
stage data is analyse at expert level. The first stage focused on quantifiable analysis where the
second one emphasized on qualitative analysis. This helps in making the report more relevant
and reliable. Even after the extensive study the conclusion reached are not final. There are many
other areas where the research is required.
Paper 4: A study Of a Multinational Gas Company
The purpose of this paper is to discuss about the disclosure requirement of the company and
entities in the situation of disaster. Here the company has taken the help of two cases studies
from Bangladesh, a developing nation to achieve the objective. The major are of focus in the
given case the analysis of two blowouts at a gas field owned by Niko Resources Limited, a
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Canadian Multinational company operating in the Oil and Gas sector (Saeidi, 2012). The author
wishes to know whether the company disclose this information voluntarily by following the
principle of accountability or out of public pressure. However from the in depth study of the
paper helps the author to reach a conclusion that the disclosure made made by Niko Resources
Limited, in the form of standalone report, was out of public pressure and not out of their
corporate accountability and professional obligation. The company evaluated that non-disclosure
of these information would have a direct bearing on their survival. However, it is not necessary
to give every non-qualitative information in the annual report as Contingent liability was
disclosed to the extent of that meets regulatory requirements (Sithole, Chandler, Abeysekera, &
Paas, 2017).
Currently many large or medium sized companies as per their expansion plan open factories or
places of business in third world countries, because of that is become necessary to determine
their responsibility and accountability for the event occurring in third world countries.
Critical Review on BHP
From an extensive study and logical analysis of the sustainability report of BHP one thing
concluded that the report is prepared after considering the guideline issued by Global Reporting
Initiative Standards comprehensive-level reporting. The approach considered for the reporting
purpose by BHP is a novice, which includes the assets, functions, achievements, marketing and
supply, and all the segments are reported for the group as a whole. The focus area of this report
to assess the materiality done on annual basis (Raiborn, Butler, & Martin, 2016). In addition, of
this, the assessment also includes analysing the aspects that stimulate overall risk as well as their
strength. In some cases after communicating with the both internal as well as external
stakeholder, it is possible to give opinion on the materiality factor.
As BHP is primarily known for its safety and human right objectives, because of that it has
carved a separate name for itself. In addition, of this objective the BHP is also charged with
health and safety of its employees and workforce and towards environment. For the proper
management of operation and for achieving the goal of sustainability, appropriate committees at
appropriate levels needs to be created. The committee’s member have expertise and experience
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in different field, which are required for the efficient management of all operation relating to
sustainability. In some cases where the opinion of different member is different, the company
can take help of external source and forum for obtaining expert opinion (Farmer, 2018). This
makes the decision more effective and relevant. The companies mainly disclose their future goals
in their sustainability report that the companies want to achieve in the four to five years.
After considering, the technical and cosmetic aspect one thing concluded that it is necessary to
disclose economic and financial position and performance of the company so that the stakeholder
have idea about the company’s performance and achievement. This information are highlights in
easy terms, which are understandable by public, and there is no ambiguity. The significant pillars
of sustainability are social, economic and environmental factors. Here we discuss how the BHP
has implemented with these three approaches (Heminway, 2017).
Social: Before calculating the amount to tax minimum 1 percent of their profit need to transfer
for the welfare upliftment of the society and to community related initiatives. The total amount
of investment in the year of 2017 stood at 80.1 million US dollars. The hazard, other critical risk
and workplace related exposures have reduced by 76 percent from the first set in the year 2012.
This type of achievement within a short period is quite commendable and add value to the
company (Grenier, 2017). Total recordable injury frequency (TRIF) has increased every year and
they help their culture and protect their environment by providing investment and by such other
mean.
Environmental: This operation is mainly help in reducing greenhouse gases emissions. Because
of this operation, the company has been saved around 975,000 tonnes of carbon dioxide. This
also helps in increasing productive and overall cost reduction and economic and financial
development of the economy as a whole. Apart from this, the company also taken a major step to
save non-renewable source of energy by using solar energy, to the extent possible. The
companies also taken steps of rehabilitating 40,000 hectares of degraded land, which has been,
envisaged (Kuhn & Morris, 2016).
Economic: For the development of economy of the nation, company paid some amount in the
form of royalties and taxes. In the financial year, 2017 company paid around 4.7 million US
dollar. Which is helpful in making the economy more powerful. Besides all this, the company is
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also contributing in nation development and increasing the overall GDP of the nation by
increasing the profits and the exports volume.
BHP’s Sustainability report helps in providing all material information, which affect the decision
of decision maker. From the above study of the Sustainability report and discussion on the same,
it can be concluded that the company is taking a number of steps to meet the requirements of
corporate social responsibility and is also being environmentally and socially sustainable in the
long run.
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