An Examination of BHP Billiton's Brazil Mine Disaster and CSR

This report critically examines BHP Billiton's Brazil mine disaster, focusing on the environmental catastrophe caused by the Samarco dam failure. The analysis investigates the company's sustainability reports, assessing whether the disclosures were a form of "greenwashing." It explores the balance between security and transparency, highlighting the reactions of BHP Billiton and Vale following the incident, and contrasting them with the findings of independent investigations. The report delves into Corporate Social Responsibility (CSR) and Legitimacy Theory, evaluating how these concepts relate to the mining companies' actions and disclosures. It argues that the companies' failure to act with due diligence and transparency eroded their legitimacy and trust. The report concludes that there is a need for greater transparency, disclosure, and social accounting within the mining industry, emphasizing the importance of proactive measures to mitigate social and environmental risks.

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BHP Billiton’s Brazil Mine Disaster
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BHP Billiton’s Brazil Mine Disaster
In the recent decades, there has been an increasing trend for multinational companies to
be environmentally friendly. The reasons behind this trend have been due to social demands as
well as world environmental sustainability requirements. Through these two players combined,
the management of major companies in the world has been left out to decide whether to fill the
gap that exists between the corporation’s disclosure and the public’s interest to verify
information provided by the company. The trend has led to increased pressure among major
companies to adhere to sustainability reports and frameworks such as those developed by OECD
and GRI. The problem with these guidelines is that the company's management have been left
out to decide what information to report and hence what can be publicly disclosed or not. This
has therefore created a room where some companies can conduct inaccurate sustainability reports
by selecting on certain parts of environmental performance and leaving out others, therefore,
concealing the truth. This paper seeks to critically examine the information in the sustainability
reports for BHP and Vale and determine if the disclosures in the sustainability reports released
were just tools for ‘‘greenwashing''.
The Brazil dam disaster is one of the most known incidences that caused the
environmental catastrophe in Samarco – Brazil. BHP Billiton together with Vale one of the
leading mining companies in the world jointly owned iron ore mine dam that led to the disaster
has been accused of having to be aware of the potential threat of the project but took no action
before the incident occurred. The companies must have failed to live up to the acceptable levels
of due diligence in their responsibilities as outlined in the OECD requirements for multinational
companies (Szoke, 2018). A further critical analysis into the scandal has shown that most of the
mining companies in the world are surrounded by a lot of controversies which in one way or

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another contradicts their core values, visions and alleged management strategies outlined in the
reports. The reports given by BHP Billiton’s in the year 2016 and 2017 first shows a picture that
the company was working so hard to improve their environmental performance ("BHP Billiton
Sustainability Report 2016", 2018; "BHP Sustainability Report 2017", 2018). It is however
ironical that the statement ‘‘so hard’’ never gained significance in 2015 when the incident
happened. A number of critics of the mine disaster have argued that the two mining companies
never executed their roles with any diligence at a ‘‘little extra’’ effort. Since BHP Billiton and
Vale never stated in their sustainability reports that they had perfect environmental performance,
I think we can categorize them as two among the greenwashing firms.
The Balance Between Security and Transparency
Since the incident occurred, it appears to me that the companies have done a little as a
way of reacting to the disaster ("How BHP and Vale react next to Brazilian dam failure will be
critical", 2018). For BHP, the management moved swiftly by making a site visit to express
sympathy for the communities and workers who were affected by the incident ("BHP Billiton |
News releases", 2018). The management of Samarco mine just placed a plain announcement in
its website giving an outline to the society of their commitment to emergency and transparency
issues and that plans were underway ("Samarco announces a change in CEO and reaffirms focus
on resuming operations - Samarco", 2018). Vale also gave a ‘‘small notice’’ on its website to
recognize the incident and that they were initiating emergency plans with Samarco to come up
with a long lasting remedy ("Statement regarding Samarco´s accident", 2018). To me, all these
reactions appears plain since the full details that led to the disaster were never stated
In contrast with what Samarco, Vale and BHP never mentioned, the Minas Gerais
environmental state prosecutor shed more light into the matter. The prosecutor argued that the

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disaster was not just an accident but a mistake in the operations of the concerned mining
companies and negligence for Samarco in their monitoring of the project (Phillips, 2018). The
court further provided details of an assessment that was done in 2013 by an independent
Brazilian organization- Instituto Pristino which revealed that there was a lot of concerns about
the integrity of the project and provided a recommendation that the operating license should not
have been renewed a call which was ignored by the relevant authorities ("Brazil | Page 3 of 201 |
World news | The Guardian", 2018). All these revelations were never made by the individual
companies a fact which shows that they were attempting to strike a balance between the security
of their reputations and transparency.
Corporate Social Responsibility and Legitimacy Theory
There have been increasing concerns about the need for Corporate Social responsibility
(CSR) in social accounting and reporting. This need has tremendously permeated into the
socioeconomic landscape where a number of legislative and regulatory authorities all over the
world have debated about the changes needed to be factored in reporting. The triple bottom line
for this has been the necessitation for the mandate of CSR and sustainability reporting among
multinational organizations (Maniruzzaman, 2011). Despite the fact that CSR disclosures have
been gaining popularity over time, there are a number of criticisms that have come forth as
postulated by the legitimacy theory. Given the importance of CSR reporting by the mining
companies in Brazil, the equivocal results of the mine disaster show the factors that might have
led the management of BHP, Vale and Sarmaco to conceal some facts about the mining scandal.
The legitimacy theory has been cited mostly in the area of environmental and social accounting.
The theory offers a deeper scepticism into the real insights surrounding the issue of voluntary
disclosures by a number of multination corporations (Hummel & Schlick, 2016). For the case of

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BHP, the legitimacy theory addresses a range of issues that arise from the mine disaster in 2015.
By looking at a number of opinions from a diverse array of sources and the recent developments
surrounding the Brazil dam disaster, there is a lot of knowledge that can be borrowed concerning
the management and the ethical legitimacy of the concerned corporations when it comes to
accounting issues (Bhattacharyya, 2015). The prepositions offered by the legitimacy theory
provides a powerful platform for understanding the surroundings of environmental and voluntary
disclosures made by corporations. The understanding further gives a direction for a critical
debate into sustainability reports released by BHP after the Brazil mine disaster.
Legitimacy has been defined as the generalized perception that can be created by
outsiders from the actions undertaken by an organization in regard to how they may be proper,
desirable or appropriate within a socially constructed system of values, norms, definitions or
beliefs. Looking at the case for BHP Billiton legitimacy could have called upon the management
of the company to exercise due diligence by playing a critical role in the mine project is one of
the investors even beyond their interest in shareholder dividends. It is true to believe that
Samarco might have been the sole mine operator in the project but, Vale and BHP being owners
should have been responsible for the environmental and social impacts that can be caused by
their supply of resources and other business materials required as per the relationship. As the
legitimacy theory propounds that corporations need to act in conformity with the society's norms
and values in order to continue in existence, BHP and Vale should have ensured that they
provide adequate compensation and seek justice to those who were affected by the disaster.
Since this has not been done adequately, I think the legitimacy of the concerned corporations has
been eroded.
Lack of Legitimacy and Loss of Trust

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The biggest setback for BHP Billiton has been the loss of trust from both the community
and the workers ("The harsh cost of BHP Billiton's Brazil crisis", 2018). Since legitimacy is an
issue that requires an empathetic and ethical approach that goes beyond risk management and
profit making, BHP should have sought at looking for measures that would reflect their concern
for both the people surrounding the dam and the environment itself. This shows that the
managers for multinational companies in the mining industry are yet to translate what is
propounded by legitimacy theory into the daily business activities of the organizations they
manage (Nakayachi, 2014). The future of the mining industry is therefore dependent on a shift in
the thinking of the leaders to voluntary disclosure of environmental and social information in
both the corporation’s annual report and in the sustainability environmental reports.
Conclusion
From a detailed evaluation of the BHP Billiton corporate disclosures and sustainability
report, it is evident that a lot needs to be done by mining industries in regard to transparency,
disclosure and social accounting. As discussed above, it is no doubt that BHP together with Vale
and Semarco actually failed to execute their mandates- a fact which led to the occurrence of the
mine disaster in 2015. Nevertheless, legitimacy concerns should have compelled the company to
investigate into the security of the project through close monitoring, putting in place proper
warning systems and listening to independent reports. Moreover, BHP should have also carried
out its own assessment of the dam to determine its integrity before giving Semarco a go ahead.
Since this was not done, I think BHP has lost its legitimacy and trust among the workers and the
community a situation which can only be done through re-assurance of commitment to
transparency and mitigation for social and environmental risks in future.
References

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