Corporate Governance and Risk Management Audit Exercise: BHP Billiton

This report presents an in-depth analysis of BHP Billiton's corporate governance and risk management practices. It begins with an overview of the organization, detailing its operations, promotion strategies to shareholders and stakeholders, and advertised values. The report then examines the processes BHP adopts to promote, monitor, and review its value commitments, with a specific focus on one aspect of these processes. A review of the company's history over the last five years is conducted, assessing how it has achieved its commitments and the fulfillment of organizational commitments obtained through interviews. The report concludes with an evaluation of the company's integrity, derived from a mini-audit, and a discussion of key issues arising from any potential hypocrisy in its commitments. The analysis covers areas such as sustainability, integrity, social responsibility, and environmental impact, offering insights into BHP's approach to governance and risk management, and how it aligns with its stated values and stakeholder expectations.

Corporate Governance and Risk Management
Assessment 3
Name of the Student
Name of the University
Author’s Note

Table of Contents
Introduction......................................................................................................................................3
1. Overview of the organisation- what it does.................................................................................3
1a. How it promotes itself to shareholder and stakeholders........................................................3
2. The advertise values for the organisation....................................................................................4
3. The processes which the organisation adopts for the promotion, monitoring and review their
value commitments-explanation of any one aspect.........................................................................5
4. Reviewing the history of the company in the last 5 years...........................................................6
4a. Analyse how the company have achieved the commitments.................................................7
5. The fulfilment of the organisational commitments obtained through interview.........................8
6. Conclusion of the company’s integrity obtained through mini-audit..........................................8
7. Indication of the organisational integrity and organisational hypocrisy.....................................8
7a. Discussion of the key issues due to the hypocrisy of the commitments................................9
Conclusion.......................................................................................................................................9
8. Reference List............................................................................................................................10
Investors haul mining giant BHP over coals on “climate hypocrisy” at AGM.............................10

Introduction
The process of governance and risk management is referred to the coordinated strategy of the
company in order to manage the various issues related to the corporate governance and enterprise
management of risk. It also involves in the verification where the company is at par to the
corporate compliance in terms of the regulatory requirements. This allows the companies to able
to reach their objectives and also help them in addressing the uncertainty so that they can act
with integrity. It also allows the company to track the various activities through conducting
internal audits, compliance as well as risk and legalities which should be in-line with the
business.
1. Overview of the organisation- what it does
BHP Billiton is a known international company that deals with the natural resources that were
formed in the year 2001. The company was formed through a merger where the company BHP
Ltd merged with the organisation Billiton PLC (Bhp.com 2018). The initial Billion which was
also a known mining company founded in 1860 known for tin and lead smelting. The BHP
Billiton is known to be one of the largest companies that were involved in the mining and
production of iron, steel, aluminium, oil, steel silver and copper. The company is also known to
be involved in engineering and transportation. The company has its head office in Melbourne,
Australia. Initially, the company was named as Broken Hill who was involved in the mining of
rich silver, zinc and lead. Further, they also experiment with the smelting of iron followed by
iron and steel works. Additionally, the company also got involved in the transportation of the
finished products and transport of coal, limestone, BHP used to operate large ships. BHP had
several subsidiaries that were engaged in activities like wire production, the building of ships,
manufacturing of the ships, production of cement and bricks.
In 1954, BHP was also known to be involved with gas and petroleum. The company was found
to collaborate with the organisation Esso Exploration Australia, Inc. In addition, the company
was also found to collaborate with Utah International Inc. This was known to be a major
producer in the metallurgical coal in Australia. The company was especially specialised in the
holding of copper, steam coal and iron ore. In 2015 after the image of the company got affected

after the Bento Rodrigues tailing dam got collapsed. This was known to be one of the worst
environmental disasters which occurred in Minas Gerais of Brazil. This resulted in the severing
of some of the assets of Billiton which was later rebranded as South32.
1a. How it promotes itself to shareholder and stakeholders
The BHP Billiton company's promotion strategy can be categorized into certain factors:-
 Corporate interest
Like any business, the company BHP Billiton had put their interest beyond that of the country.
Since 1885, BHP Billiton was known to be one of the largest non-financial organisations in
Australia. Addition the company was known as the largest employer in the private sectors. The
company has its roots deeply rooted throughout the country of Australia. The type of business
adopted an operation and which involved various states and countries (Lewellyn and Logsdon
2016). The type of business activities which was conducted by the company has to lead to the
development of strong international contacts and bringing in close approximation to the
government, local, state as well as territories and federal. Besides, the company also has
contributed to the development of the society through donation in the governments, federal and
local organisation. Further, the company also contributed to the public purse through the
payment mining loyalties and income tax. In addition, increasing in the mining activities
performed by the organisation led to the development of the cities.
 Increase in the number of jobs
The company BHP with their increase in manufacturing firms and an increase in the cluster of
the downstream metal resulted in the generation of a large number of jobs. Further, the company
also provided products which could be utilised for the development of the infrastructure of the
city and defence.
 BHP Billiton's contribution to maintaining sustainable communities
The company takes several initiative and investment in terms of social responsibility. The
various steps which were adopted by the company varied from issues as well as stakeholder
spread all over the country. During the operation of the Company, they engage with the people in
the society in order to understand the activities of the company which has affected society. The

views were taken and reviewed to make necessary changes (Robinson 2017). The review is done
in their sustainable report and the process by which the changes and modification are done in
their operation is known as risk management.
2. The advertise values for the organisation
The main aim of the organisation is to create a long term value for the shareholders through the
process of discovery, development and acquisition of the natural sources. In addition, marketing
plays an important role in the business model of the organisation. The values which the
economic and the commodity cycle of the organisation depends upon are sustainability, integrity,
respect, simplicity, accountability and performance of the organisation (Fish and Wood 2017).
The operational capability of the organisation is taken to be the foremost strategy of the
company. The performance of the business involves in the stretching of the skills and capabilities
of the individual working of the company in addition to the simplicity in which the business is
operated.
The asset value of the company depends upon the prices of the products in the global markets.
Thus the values of the assets of the company very based on the volatility of the market prices. In
addition fluctuation in the commodity prices have led to the price shifts that reflect the global
economic and geopolitical condition. The uncertainty related to the economic growth socially in
case of the countries which are economically developed may lead to adversely affecting the
demand and prices of the commodities (Barnes and Burke 2017). The company is known to
foster a culture of values and ethics that contribute to the integrity and respect to everyone. This
has allowed the management of the organisation in operating the business with integrity and
maintaining a level of transparency.
The company takes the adequate initiative in developing and motivating talented employees for
the long term success of the organisation as well as the success of the employee. The recruitment
and selection of the candidates within the organisation are done on the basis of the unique
talents, qualification, abilities and aptitudes. There are certain cases if required the company also

provides training to the deserving candidates for the economic empowerment and providing
opportunity irrespective of the race or ethnicity of the organisation.
3. The processes which the organisation adopts for the promotion, monitoring
and review their value commitments-explanation of any one aspect
The different methods and processes by which the organisation promotes and reviews where the
values which the company has been committing was met or not. In order to maintain
sustainability, the company follows the guidance provided by the Sustainability Committee
which is being assisted by the Board of Health, Safety, Environment and Community. They
ensure that the operation of the company is compliant with the legal and the regulatory
guidelines which are been provided by the Government. Further, it also involves the
identification of sustainability issues and material risks (Epstein 2018). The second factor is the
maintenance of integrity and transparency in the operation of the business. This is done through
monitoring of the product stewardship, closely discussing and working with the contractors and
the suppliers and monitoring whether the operation procedures are safe and do not affect the
people involved.
Among the commitments which are made by the organisation, one of the crucial values of the
company is their social responsibility. With the increase in the climatic changes, it is important
the companies involve with mining abide by the policies as per the government norms. One such
initiative which helps in monitoring of the business operation and functionalities is the reduction
of the greenhouse gas emission (Collier and Ireland 2018). The company evaluated that they
produce 50,000 tons of carbon dioxide equivalent per year for which they would require a plan
that should be implemented and maintained so that the energy efficiency methods can be
evaluated and identified. There were several factors on which accessing the energy supply
depends on.
These factors are influenced by the energy access, global demand of the energy transmission of
power and political and regulatory uncertainty related to the access of energy. In addition, the
company also involves in the management of water, soil and land which may get affected during
the operation of the mining. The land management and maintaining the biodiversity is

maintained by management of the land access and increase in rehabilitation. The access of the
land is handled on the basis of the impacts of the operation in the social, environmental and
political conditions (Pottenger and Leigh 2016). The company evaluates the long and the short
term impact of the mining operation which can affect the stakeholders of the organisation, in
addition to the air, water and the communities. The company has been effectively engaging with
the communities in order to address the concerns and issues rose by the community.
4. Reviewing the history of the company in the last 5 years
The safeties of the employees are one of the important commitments which the company is
vigilant about. The effectiveness of the material risks analysis and the critical controls are
checked by the organisation. The frequency of injury caused during the mining operation is
monitored closely by the management (Valle 2016). The Total Recordable Injury Frequency was
5.0 in 2011 which was reduced to 4.6 in 2013.
Year Ending on 30
June
2013 2012 2011
Total Recordable
Injury Frequency
4.6 4.7 5.0
Due to the toxic exposure in the mines, there was an increase in the health risks which led to
fatigue, life-altering disabilities due to the exposure for noise, harmful toxic minerals like nickel,
sulphuric acids (Robertson and Argent 2016). In order to minimise the risk, the organisation
evaluated the rate of occupational illness incidence amongst 10,000 employees and compared
with the consecutive year's results. Following results were observed:
Year Ending on 30
June
2013 2012 2011
Hearing loss due to
noise
10.2 19.4 20.7
Musculoskeletal
disorder
24.8 20.7 17.4

Other illness 12.9 7.0 5.4
Total 47.9 47.1 43.5
In addition, the amount of investment done by the organisation for the community helped in the
support of various projects and making a positive impact through the contribution towards
society. The investments helped the community during disaster relief issues and also providing a
donation to the non-profit organisation (Bhp.com 2013). Around $277.4 million funds were
invested by the company for the sustainable development projects in the country.
Year Ending on 30
June
2013 2012 2011
Community
Investment
245.8 214.1 195.5
The company is observed to respect human rights and have been participating in their
commitment operating according to the guidelines provided by the United Nation of Human
Rights. The management of the company has a process of identifying and documents the various
potential human rights challenges by conducting a Human Right Impact Assessment (HRIA).
Each of these HRIA has been verified and validated in addition to the engagement of the
stakeholders (Bhp.com 2016). The analysis is done by the qualified specialist at an interval of
three years and is then reviewed at the end of the year. The security management team also
involves the identification of material risks. So that security of the people, country and the
properties can be checked and reviewed. Both public and private securities are managed by the
organisation for the protection of the people working in the organisation and the assets related to
the company.
4a. Analyse how the company have achieved the commitments
The commitments which were taken by the organisation were addressed on understanding the
rights and the interests of the society and also involved in the building of a cross-cultural
understanding. This also assists in the planning of the engagement processes as well as
participating in the process of decision making (Bice 2016). The various commitments which are
been addressed by the company involve engagement of the ICMM members in collaboration

with the government in order to manage the interest of the indigenous people. In order to obtain
permission at the beginning of the project, the management of the BHP Billiton identify the
landowners who may get affected by the activities of the organisation (Debnath 2019). By
understanding the masses of people who will get affected by the operation of the mining
activities a community consultation and initiation of engagement program is done. This allows
the people to be aware of the various activities which will be involved in the operation of the
mining.
The sustainability approach of the organisation helps in defining the values and the purpose of
measuring the success of the company in meeting the commitment of the organisation. This
helps in maintaining the safety, environment and health in addition to the social responsibility of
the organisation (Parker, Cox and Thompson 2018). The sustainability governance development
can be characterized on the basis of the management of the primary responsibility involving in
the implementation of the designs which will be effective for the HSEC system of management.
The management of the organisation is responsible for having accountability related to the
performance of HSEC. The committees which handle and monitor the sustainability
developments meet seven times in a year to evaluate and consider the strategic environmental
issues including issues related to community, HSEC trends and internal audits.
5. The fulfilment of the organisational commitments obtained through
interview
The company BHP Billiton have specific commitments related to the risks related to human
rights. The commitments related to the society involve the development of the community,
engagement of the community in consultation before initiation of a project, force or child labour,
freedom in the process of association in addition to collective bargaining. The company also
involved in taking initiative against land access, impacts of gender in case of mining,
enforcement of security and law agencies and health and safety at the workplace. According to
the stakeholder, the HRIA of the company are verified as per commitment at every three years
and the assets are updated annually (Froyland et al. 2018). In case there is any material risks are
identified in the impact of the human rights, implementation and annual review of the
management plan of human rights are conducted. This also includes the training of the staffs and

the contractors working for the company. Further, the stakeholders have also reviewed that the
company have involved in the engagement of the stakeholder in order o have a perception
survey. These surveys helped in the measurement of the progress at the local level of the success
of the engagement of the stakeholders. According to the employees, the surveys associated with
the employees are carried out on a regular basis.
6. Conclusion of the company’s integrity obtained through mini-audit
In spite of taking several initiatives related to maintaining transparency as well following ethics
and values as committed by the organisation. In addition, the company have also taken several
initiatives related to the reduction of the risk related to the employees working in the mine and
the disabilities faced by them (Blowfield, Karam and Jamali 2017). The company have a
procedure of conducting audits for the evaluation and monitoring of the various aspects related to
the operation of the business. However, in certain cases, it has been observed that the company
have been lagging behind in contributing to the climatic changes that may after the support of the
shareholder of the company as well as the natural environment.
7. Indication of the organisational integrity and organisational hypocrisy
The organisational integrity is referred to the integrity in the ground of ethics in respect to the
organisational activities and the decision-making process within the organisation. Starting from
the integrity in the tax system of the organisation in the local country as well as globally where
the company operate. This allows the company in maintaining transparency with the
government as well as with the stakeholders, customers, communities and the employees. The
company is also known to be engaging with the authorities of the revenue departments so that a
sustainable relationship can be maintained.
Organisational hypocrisy is involved in the discourse, decisions as well as actions which the
organisation takes for the operation which seems independent to each other. In such cases it is
observed that even if there are certain commitments are made by the organisation, they do not
implement into work (Clientearth.org 2017). For instance, in the case of the BHP Billiton
organisation, according to the investors, the climatic policies which were committed by the

company was hypocritical. According to 100 different shareholders, the resolutions which the
company had taken to maintain the climatic resolutions were not followed completely.
7a. Discussion of the key issues due to the hypocrisy of the commitments
The various issues which point to the organisational hypocrisy of the BHP Billiton are as
follows:
 Several conflicting agendas related to the climatic changes. Although according to the
management of the company carbon pricing and transitions for the clean energy initiative
has been taken (Ft.com 2017). However many suspected that the company had to pay
million dollars in order to cover the destabilisation of their climatic policies.
 When the company was criticised on the lack of the ability to maintain the laws related to
the climatic changes, they threaten to withdraw from the World Coal Association as they
receive a very small amount of the membership benefits (Tyagi 2016). This reflects the
growing importance of the social and environmental standards in multinational
organisations.
 The disposition of the mine waste in the sea against which the UNESCO had appealed to
the government not to provide permission to the company for nickel mining (UNESCO’s
2017). This is to act against the threat related to the protected areas which got polluted
due to the mining activities.
Conclusion
In response to the various pressures of both the public and the stakeholders, companies have
started taking several initiatives for the reduction in the excessive risk-taking in the operation of
the business. Thus the risk governance enables the organisation to focus on the internal control
thereby taking initiative on the audit functions.

Reference List
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