Corporate Sustainability Performance of BHP Billiton: Analysis Report

This report provides an in-depth analysis of BHP Billiton's corporate sustainability performance, focusing on the company's 2017 sustainability report. It examines the company's current strategy, evaluates its success in meeting set targets related to safety, health, community engagement, climate change, and environmental protection, and offers recommendations for improvements. The report explores the meaning of corporate sustainability, emphasizing its role in creating long-term shareholder value while managing environmental, social, and economic risks. It also discusses the drivers of sustainability change within BHP Billiton, highlighting areas such as greenhouse gas emissions, community engagement, and indigenous contracting. The analysis concludes with an overview of the company's future sustainability targets and strategies, emphasizing the importance of proactive sustainability measures in enhancing financial value and maintaining a competitive edge. The report highlights the significance of addressing societal expectations and the challenges related to resource scarcity and climate change in shaping BHP Billiton's sustainability approach.

Running Head: Law 1
Law

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Executive summary:
This paper analyzes the sustainability performance of BHP Billiton and also evaluates the current
strategy of the organization. In this sustainability report published by BHP in 2017 is evaluated
and on the basis of performance and results current strategy of company is described. Various
new recommendations are also stated which can be incorporated in the sustainability strategy of
the company.
This paper also described the meaning of Corporate Sustainability and as per this definition it is
considered as approach related to business which not only creates value for long term
shareholders by increasing the opportunity but also manage risks result from changing
economies, environment, and social developments. At the end brief conclusion is stated which
concludes the significant points of this paper.

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Contents
Introduction:...............................................................................................................................................4
Brief analysis of corporate sustainability performance of BHP Billiton:......................................................5
Current approach of the BHP Billiton in terms of corporate sustainability strategy:...................................8
Targets stated by BHP for corporate sustainability:................................................................................8
Drivers for sustainability change & changes required:............................................................................9
Changes required in the sustainability strategy of BHP:............................................................................11
How strategy add value:........................................................................................................................15
Conclusion:................................................................................................................................................16
References:................................................................................................................................................17

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Introduction:
Corporate Sustainability is the approach related to business which not only creates value
for long term shareholders by increasing the opportunity but also manage risks result from
changing economies, environment, and social developments. It must be noted that trends related
to sustainability result in major changes in globalize world and it also have measurable impact on
companies top and bottom lines. Expectations of society are redefined because of various long
term challenges such as resource scarcity, demographic shifts, and changes occurred in climate.
Corporate sustainability is usually based on two guiding principles that are:
 Sustainability business practices create shareholders value in long run in the competitive
market.
 Sustainability factors also represent opportunities and risks which must be addressed by
competitive companies (ROBECOSAM, n.d.).
Now, major opportunity exists for companies to put them at the position of sustainability
leaders at global level by focusing on the changes occurred in society. Those companies who
already understand this issue and taking lead on it have implemented the strategies which are
more advanced for the same. There are number of sustainability leaders at current stage who will
gain many benefits such as goodwill, increase in market share, and stock market returns.

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Few years back, corporate sustainability is considered as risk management issue which
suddenly increases the cost of the company. Now this view is completely changed, because this
term sustainability is considered as broader issue. As social and environmental issues are
considered as financially important, there are number of companies which realized that proactive
sustainability strategy will add financial value in their business and because of this every major
company frame sustainability strategy and access their performance on regular basis in this area
(CSR wire, 2017).
This paper analyzes the sustainability strategy and corporate sustainability performance of
BHP Billiton which is considered as largest diversified natural resources company in the world,
and also discusses the drivers related to sustainability change facing by BHP Billiton, changes
required in organization, strategy which can be adopted by the organization and reasons for
adopting that strategy, recommendations in lieu of strategy, etc. Lastly, paper is concluded with
brief conclusion.
Brief analysis of corporate sustainability performance of BHP Billiton:
BHP Billiton is the world’s largest diversified natural resources company, as it is the
world’s largest producers of major commodities which includes aluminum, copper, energy coal,
iron ore, manganese, metallurgical coal, nickel, silver and titanium minerals, and it also deal in
oil and gas. The main aim of this company is to create long term shareholder value by discovery,
acquisition, development and marketing of natural resources. BHP is global organization, and
this company has almost 100000 employees and contractors across the 25 nations.

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First charter related to corporate sustainability of BHP Billiton reflects that their priority
is to put health and safety first, and being environmentally responsible and also provide support
to the communities in which they operate their business. For the purpose of operating
sustainability BHP Billiton does everything it can do. Recently, BHP Billiton published its
sustainability report of 2017. Report of 2017 is considered as very important report because
company mark financial year 2017 as end for its sustainability target period that is from
FY2013–FY2017. Below stated table summarize the financial performance of BHP Billiton in
the area of corporate sustainability in year 2017:
Area TARGET TARGET MET OR
NOT MET
COMMENTS
Safety Zero work-related fatalities and
improvement on Year-on-year
related to our total recordable
injury frequency (TRIF).
Target related to zero
work related fatalities
is not met, but second
target related to TRIF
is met.
Performance related to
TRIF at operated assets in
FY2017 was
4.2 per million hours
worked, which shows 2%
improvement as
compared to FY2016.
Health Additionally use the personal
protective equipment which
protects the workforce of
organization, and also help in
reducing the occupational
exposure related to carcinogens
and airborne contaminants by 10
per cent.
Target is met Reduction of 76% shown
as compared to FY2012
related to occupational
exposure related to
carcinogens and airborne
contaminants.
Community This area includes various targets
and these targets are stated below:
 No events of community
which are significant.
 Company invests almost
1% pre- tax profits I the
programs related to
community which also
includes cash and
administrative costs
calculated on the basis of
previous three years’ pre-
tax profit.
All the stated targets
are met
Following are some
results which are
achieved by the company:
 No events related
to community are
occurred because
of the activities of
BHP Billiton in
2017.
 BHP invested
almost US$80.1
million in
FY2017 to

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 Company conduct annual
reviews related to
voluntary principles
adopted by company on
Security and Human
Rights and implement
improvement plans for the
purpose of closing
identified gaps.
 All the assets have local
procurement plans with
associated targets.
community
programs.
 On the
continuous basis
company conduct
annual reviews
related to
voluntary
principles
adopted by
company on
Security and
Human Rights.
 All the assets
have local
procurement
plans with
associated
targets.
Climate
change
While growing the business
company try to maintain the
greenhouse gas (GHG) emissions
below FY2006 levels.
Target met. Company reduces the
GHG emission by 21% as
compared to FY2006 base
year.
Environment This area includes various targets
and these targets are stated below:
 No events of environment
which are significant.
 All the assets related to
water a material risk
which includes volume
and quality considerations
will set targets and
implement policies for the
purpose of reducing their
impacts on water
resources.
 All the developed assets
must be dedicated to
biodiversity management
plans.
Target met. Following are some
results which are
achieved by the company:
 No events related
to environment
are occurred
because of the
activities of BHP
Billiton in 2017.
 Projects are
implemented for
the purpose
managing the
water related
risks.
 Plans related to
biodiversity
management
plans are made
(BHP Billiton,
2017; BHP
Billiton, 2016).

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Current approach of the BHP Billiton in terms of corporate sustainability
strategy:
Targets stated by BHP for corporate sustainability:
This report also states targets for year 2022, and BHP must built its strategy related to
corporate governance on the basis of these targets and after considering the performance of last
years. Targets stated by report were approved by the Sustainability Committee in June 2017 and
took effect from 1 July 2017.
Targets related to health and safeties are consistent with those targets which are adopted by
companies in recent years, and now health targets of the company mainly focused on the material
exposures of diesel particulate, silica, and coal mine dust. Following are some health targets set
up by company for the end of 2022 (BHP, 2017):
 Company wants to achieve reduction of 50% in the number of workers in relation of
material exposures of diesel particulate, silica, and coal mine dust in comparison of FY
2017.
 Targets related to safety are same as FY 2017 that are Zero work-related fatalities and
improvement on Year-on-year related to our total recordable injury frequency (TRIF).
On the other hand, targets related to community will continue to focus on reducing the
risk related to life and also improved quality of life in case of host communities in association
with the United Nations’ Sustainable Development Goals (SDGs). Following are some targets
stated by company in relations to community:
 Zero events related to communities which are significant in nature.
 Company targets to make social investments for the purpose of improving the quality of
life in host communities and also for achieving the United Nations’ Sustainable

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Development Goals (SDGs). Company also target to invest at least 1% of pre-tax profit
for meeting these targets.
 Plans related to regional indigenous people will be developed which also support the
implementation of strategy related to Indigenous Peoples, and these plans include all the
assets geographically.
Environment targets of the company still focus on the greenhouse gas emissions, water and
biodiversity. Some long term goals are also set around global sustainability agreements and
frameworks, which are consistent with the Paris Agreement and SDGs. Following are the targets
of company in context of environment:
 Company targets to reduce the freshwater withdrawal by 15% till 2022 as compared to
2017, and long term goal of company is to enable the integrated water resource
management at all places where company operates by FY2030 in line with SDG.
 Company also wants to improve marine and terrestrial biodiversity by developing
framework which evaluate and verify the benefits of company’s actions in collaborations
with others and also contributes in the conservation areas at both national and
international level for the purpose of improving disturbed land footprints.
Drivers for sustainability change & changes required:
As stated by Benn and Durphy (2007), societal duty of corporate is the effect of
profitability and not the effect of cause. There is big question whether corporate sustainability
strategy of BHP is farmed for concern of society or for increasing the net income of the
company. For answering this question, BHP argues that sustainability strategy of the company
mainly framed for achieving these targets:

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 Strategy considers cardinal wellness, safety of workforce, environment protection,
community and socio economic hazards, etc.
 Increasing shareholders value in the long run.
World is facing various complex and interrelated challenges while balancing the increasing
demand of resources in context of sustainable development. In case of BHP Billiton, climate
change is the area on which company mainly focused for the purpose of increasing its
contribution in corporate sustainability. Company recognize its responsibilities for addressing the
risk related to climate change and also find different ways in association with other for reducing
the greenhouse gas emissions.
New targets are framed by company by updating their strategy, and this includes working
with the government of Australia to help define a National Carbon Emissions Trading System
and also for building trading profile in Europe. Following are some drivers which are faced by
the BHP Billiton in sustainability change:
 Company targets to zero harm to environment and community, but company is not able
to achieve these targets because it requires appropriate programs and systems to be
implemented. These programs must be understood and followed by all. Therefore,
application of risk control protocols and elimination of Zero barrier incidents will be the
priority of the company. Company can also improve in this area by follow up the
incidents which are significant to Zero barrier policy and by managing the contractors
(BHP, 2007).
 Another driver of company is efficient use of energy and greenhouse gas emission in
respect of all the assets. In Chile shortage of gases will be considered as major challenge

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in next few years and it can be considered as key driver by the company in finding
opportunities for both energy conservation and reduction projects. Company can consider
change in its strategy for using the resources in efficient manner for avoiding such
situation in Chile in future.
 Some barriers are faced by company for the purpose of implementing the indigenous
contracting strategy because of structural and cultural issues, and this reduce the ability of
the company to grab corporate and flexible contracting opportunities (BHP, 2015).
 Another issue related to BHP in implementing their corporate sustainability strategy is
the management of solid waste which requires highest expenditure in terms of cost.
However, water resources management is also the big issue for the company because
mining industry requires lot of water and activities of mining industry badly affects the
water resources. As stated by ABS, almost 401GL water was intake by the mining
industry, and the main supplied of water is noted for 49GL and self-extracted water noted
for 352GL. Total discharged water were 183GL (ABS, 2002).
Changes required in the sustainability strategy of BHP:
Current strategy of BHP Billiton includes the voluntary principles related to policy
development. Three key policy documents of BHP Billiton are charter of BHP Billiton, policy
related to health, safety, environment & community, and management standards on community
development. Collective all these policies framed sustainability strategy of BHP Billiton which
reflects transparency, accountability, human rights, communication, collaboration, etc (Kamp,
2003).
When corporate sustainability is considered by board of the company then policies related to
sustainability are integrated in corporate strategies and planning. It is necessary for organization

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to manage their obligations in terms of increased regulation, protecting the brand image, and
ensuring stability in supply chains while grabbing the opportunity for enhancing their
performance and using the agenda related to sustainability for increasing strategic advantage. By
developing and integrating detailed sustainability vision into the long term strategic plan of the
company creates long term value for shareholders and enhances the reputation of the company
which is considered as common challenges for all the organizations (PWC, n.d.). Following
changes are recommended in the strategy of BHP Billiton which helps the company in achieving
the lead in corporate sustainability:
 It is not possible to replace the financial performance from environmental
performance: Now performance of corporate is not only defined in the terms of
profitability, which means it is also measured in context of environmental and social
factors. However, it must be noted that environmental and social performance of the
company does not replace the financial performance of the company as a corporate
objective (Akhavan, Beckmann, 2017).
Social and environmental performance of the company is possible only when company
has resources which can be gets through financial performance only. If there is lack of
resources then it is not possible for company to contribute in the programs of community
and ensures corporate sustainability. Therefore, it becomes necessary for company to
operate in more sophisticated manner within the environment and social context. As
stated above, BHP Billiton targets to contribute 1% of their pre-profits in the community
programs and it becomes impossible for BHP Billiton to contribute in programs if no
profits are there (The Guardian, 2013).