Corporate Social Responsibility Report: BHP Billiton Case Study

This report provides a detailed analysis of BHP Billiton's Corporate Social Responsibility (CSR) policies and practices. It examines the company's ethical standards, environmental protection measures, stakeholder management, workforce issues, and governance structures. The report highlights the discrepancy between BHP Billiton's stated CSR policies and its actual actions, particularly focusing on the Ok Tedi environmental disaster in Papua New Guinea. The study explores the company's financial investments in environmental issues and its CSR activities, including the BHP Billiton Foundation. The report concludes that, while the company's stated CSR policy is well-articulated, there is a significant gap between policy and operational practices, leading to negative impacts on stakeholders and the environment. The report uses the Ok Tedi case as a prime example of the loopholes in the CSR policies of BHP Billiton.

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Executive Summary
The report is on the BHP Billton an Australia based mining company that extracts and processes
the minerals in Australia and elsewhere. The report studies the CSR policy set by the company to
regulate their actions. However it is evidenced that their actions considerably deviates from the
stated CSR policies. The findings are supported by the case of Ok Tedi which was an
environmental issue caused by the company by neglecting the corporate responsibilities.

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Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................3
Case Description..............................................................................................................................3
Budget Spent on Environmental Issues...........................................................................................3
BHP CSR Activities........................................................................................................................4
Ethics............................................................................................................................................4
Environmental Protection............................................................................................................4
Stakeholder Management.............................................................................................................4
Workforce issues..........................................................................................................................4
Governance..................................................................................................................................5
Results and Effects..........................................................................................................................6
CSR other than Operation................................................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
Ok Tedi is the open pit copper and gold mine situated in Papua New Guinea. The mining
site located near the Ok Tedi River in the Star Mountains Rural LLG in the North Fly District of
the Western Province. BHP Billton on the other hand is a Melbourne based international mining
company. BHP Billton extracts and processes the minerals, oil and gas primarily from Australia
and America (bhp.com. 2017). This report will focus on the ethical issue of BHP occurred in Ok
Tedi mine. A detailed study of the company’s CSR policy will be conducted to understand the
responsibility and operational strategies.
Case Description
BHP was sued by the Papua New Guinea landowner in the Victorian Supreme Court of in
Melbourne in 1994. The allegations were drawn on BHP stating that the company is causing
environmental degradation by dumping the mine tailings waste into the rivers of Ok Tedi and
Fly. The company came to an out-of-court settlement of AUUS$40 million in financial
compensation along with the dredging of tailing from the rivers to stop further damage in 1996.
The company was again alleged in 2000 for breaching the terms of 1996 settlement. It led the
company to withdraw its operations form Ok Tedi mine to the Papua New Guinea Sustainable
Development Program Limited transferring about 52% of its equity stake (Business-
humanrights.org. 2017).
Budget Spent on Environmental Issues
The company had to pay a AUS$ 40 million to the state in financial mode for violating
the environmental responsibilities and causing a serious degradation of the nature. Moreover,

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their actions resulted in a degradation of the fish communities nearby. In addition to the monitory
payment, the company also had to take part in the process of dredging the tailing out of the
rivers. It will limit the further damage.
BHP CSR Activities
Ethics
Company’s CSP policy communicates the ethical pursuit of the company to it major
stakeholders. According to their policy, the considers zero tolerance for the misconducts of
discrimination, compliance with law, corruption, bribery and extortion, biofuels, world heritage
sites and protected areas, freedom of association, workplace health and safety, living wages,
treatment of employees, forced or compulsory labour, child labour and the environment
(O’Callaghan and Graetz 2017).
Environmental Protection
According to BHP, they operate accordingly to the manner, which is protective of the
environment and comply with all applicable environment laws, regulation and standard.
However the case occurred in Ok Tedi on 1994 reflects actions differently causing the
environmental degradation. It resulted in deforestation of more than 3000 square kilometers
turning the tropical rain forests into savannahs. It also caused a significant degradation of the fish
population (O’Callaghan and Graetz 2017).
Stakeholder Management
The company communicates their CSR information to the stakeholders for better manage
their operations. Moreover, they have a process of receiving feedback from their major

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stakeholders that will in turn help them in managing the business in a more ethical manner
(O’Callaghan and Graetz 2017).
Workforce issues
BHP claims that their CSR policy considers the health and safety of their employees and
set the workplace accordingly. The CSR policy of the company states that it ensures the safety
and health of the working forces. Further it takes appropriate precautionary measures to protect
employees from work related hazards and anticipated dangers. Moreover, the company assures
the supply of health and safety training to their employees on a regular basis. However, the
practicality differs from their stated CSR policy. However, the report produced at Beyond Blue,
the workers of BHP are expected to suffer mental health condition in their life time due to
working in BHP worldwide. The mental health was identified as an issue in BHP workplace that
needs immediate attention. However, the maximum number of workers in BHP is male who
denies to receive any kind of assistance of mental health. However, the company readdressed its
CSR policy by including the mental wellness standards, which was launched in 2014
(mqmentalhealth.org. 2017).
Governance
The company seeks the highest level of governance for their organization and strives to
foster a culture to value and reward the exemplary ethical standards, personal and corporate
integrity and respect for others (BHP Billiton. 2017). They have different governance practices
and bound by them. They are:
 Constitution of BHP Billton Limited
 Memorandum

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 Corporate Governance Statement
They also formed board committees that operate under specific terms that includes:
 Board Governance
 Terms of Appointment of Non-Executive Director
 Non-Executive Director Induction Program
 Remuneration Committee
 Risk and Audit Committee
 Nomination and Governance Committee
 Sustainability Committee
 Finance Committee
Furthermore, the company has some of the core policies by which, all the operations are
coordinated. They are:
 Code of Business Conduct
 Securities Dealing
 Provision of Audit and Other Services by the External Auditor
 Market Disclosure and Communications
 Independence of Directors Policy
 Our Approach to Diversity
Results and Effects
Though the CSR policies stated by the company reflects the responsibilities of
undertaken by the company is neat, they considerably varies in actuality. The OK Tedi is a key

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example that highlights the loopholes in the CSR policy of BHP Billton. Though they state some
of the eye catching CSR policies and claims to be bound by the rules, their actions considerably
deviates. They actions have cost a number of stakeholders and also threaten the environmental
disasters in their workplace.
CSR other than Operation
BHP Billton Foundation is an extension of the BHP Billton mining company that
volunteers to the social causes. This is a charity firm that aims to make a distinctive contribution
to the unprecedented sustainable development challenges faced by the current generation
(bhp.com. 2017).
Conclusion
The report can conclude that the CSR policy stated by the company is well articulated
and well structured. The company can truly achieve the sustainability by following the CSR
policies set by them. However, there is a significant gap between the policy stated and the
operations undertaken by the company. They failed to address the policies which resulted into
the case of OK tedi and degraded the environmental condition harming the major stakeholders in
the area.

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References
BHP Billiton. 2017. BHP Billiton | Governance. [online] Available at: http://www.bhp.com/our-
approach/our-company/governance [Accessed 28 Oct. 2017].
bhp.com. 2017. BHP Billiton | About us. [online] Available at: http://www.bhp.com/our-
approach/our-company/about-us [Accessed 28 Oct. 2017].
bhp.com. 2017. BHP Billiton | BHP Billiton Foundation. [online] Available at:
http://www.bhp.com/community/bhp-billiton-foundation [Accessed 28 Oct. 2017].
Business-humanrights.org. 2017. BHP lawsuit (re Papua New Guinea) | Business & Human
Rights Resource Centre. [online] Available at: https://business-humanrights.org/en/bhp-lawsuit-
re-papua-new-guinea [Accessed 28 Oct. 2017].
mqmentalhealth.org. 2017. Workplace mental health at BHP Billiton. [online] Available at:
https://www.mqmentalhealth.org/articles/bhp-billiton-work-place-mental-health-case-study
[Accessed 28 Oct. 2017].
O’Callaghan, T. and Graetz, G., 2017. Introduction. In Mining in the Asia-Pacific (pp. 1-15).
Springer, Cham.