Corporate Dialogue With Vulnerable Others And Corporate Social Responsibility Essay.

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Obstacles to Corporate Dialogue with Vulnerable Others

The authors have presented this article as a case study involving corporate dialogue with vulnerable others. ‘Vulnerable Others’ are those marginalized external groups which are now finding an increasing presence in the business literatures of corporate giants and are acting as the key of making the Corporate Social Responsibility (CSR) of these corporate houses a reality tool in their corporate learning (Deegan, 2016).

This article has also made an attempt in examining possibilities of conditions which can possible hinder the dialogue between the corporates and the marginalized external groups. The latest example of the hindrance is failure in January 2009 of talks to resolve the issue of AU$2.2 billion BHP Billiton Ravensthorpe Nickel mine situated in Western Australia (Deegan, 2014). Since then, a stakeholder dialogue is being given importance in CSR strategies by large corporates such as BHP as well as in the academic literature advocating this strategy. Both factions are trying to overcome the inherent tension or contradiction which is believed to be widening the gap between ‘doing good’ and ‘doing well’.

The academic fraternity, which advocates the dialogue as an open and interactive communication, considers it essential for the corporate’s organizational learning and a creative problem solving tool through which CSR can be realized. This fraternity, says (Dima (ed.), 2016),  also argues that CSR can be made ‘more realizable’ by paying greater attention to the process of participatory communication during situations of differences and conflict for creating a win-win response from both parties (Islam, 2014).

Although, say (Henderson & Braun (ed.), 2016), arguments are being held to make this process of creating a dialogue and/or for a face-to-face encounter between the stakeholders and the vulnerable others, as a key towards realizing the use of an effective CSR, there is, so far, a very limited progress made in the work for undertaking an empirical analysis of such an engagement (Gibassier & Unerman, 2014). As most experts have argued, there is utmost necessity of a critical examination of the vulnerable others and stakeholder relationships, if at all the corporate sector is to make CSR work in real terms for whole of the society and not just for large corporations (Deegan, 2016).

1. Corporate Accountability

in the Samarco Chemical Sludge Disaster

Author: Karen da Costa. School of Global Studies, University of Gothenburg, Gothenburg, Sweden

This paper highlights the Samarco chemical sludge of 2015 in Brazil. The incident has been considered as the worst environmental disaster to date in Brazil. Very little media attention on international level was given to the incident, despite its devastating impact on a large area. The disaster not only affected a large section of the population, the ecological balance and the environment were also critically disturbed (Deegan, 2014).

Samarco Chemical Sludge Disaster

This disaster implied the impact such incidents create in disrupting the normal way of life of a society. It was able to highlight the vulnerability level of both, the society and the human population. It also highlighted the calamitous events, as per (Grigore, Stancu & McQueen (ed.), 2017), which disturb the normal activities of the nature and the humans.

The Samarco chemical sludge incident forces the academics, the social scientists into giving a serious thought towards conceptual understandings of disasters, and must also invoke a sense of responsibility among the corporate world to not only meet but to implement safety standards in order to safeguard the vulnerability of communities which can be, directly or indirectly, subjected to such unwanted incidences (Schaltegger et al (ed.), 2008).

This tragic event not only gave evidence of Brazil’s limited preparedness for disasters of big magnitude, it also demonstrated the importance of preventing disasters in Brazil, especially in the mining sector. Corporates, admit (Aluchna & Idowu (ed.), (2016), cannot escape responsibility by just showcasing their voluntary commitments, they must also demonstrate a strong obligation towards human rights, environment and the ecology of the area, which is vulnerable during a disaster (Dima (ed.), 2016).

Corporate standards, which are relevant to business standards, must make a distinction between Corporate Responsibility and Corporate Accountability. It has been usually demonstrated by corporate houses by making their Corporate Social Responsibility (CSR) largely limited to voluntary commitments, in the fields of human rights, ecology sustenance and the environment. On the other hand, these corporate hoses relate their Corporate Accountability as limited to the responsibilities written in the law (Gibassier & Unerman, 2014).

The cost to human, ecology and the environment by the Samarco disaster cannot be gauged in monetary terms compared to the loss related to right to life, right to adequate housing, right to water and the right to a healthy environment faced by the fishery communities and the indigenous people (Henderson & Braun (ed.), 2016). A detailed analysis has indicated that the toxic mud will cover nearly 10km of the coastline and will affect the entire ecosystem of the river water affecting water supply to more than 800,000 people (Aluchna & Idowu (ed.), (2016).

2. Corporate Governance and Environmental Reporting:

An Australian Study

Not only in Australia, but all over world, large corporate houses are coming under public scrutiny and are feeling the pressure in disclosing to the world information related to their efforts towards sustainable environment performance and maintenance of the ecological balance (Schaltegger et al (ed.), 2008). In Australia, the corporates are feeling less motivated towards disclosing such information (Deegan, 2016).

Corporate Governance and Sustainability Reporting

Although over the years, corporate governance was being adopted well, it has been only recently that its accrual benefits have been expanded by the corporate sector to develop a healthy relationship between non-?nancial reporting and corporate governance mechanism (Deegan, 2014). The level of corporate disclosures has risen steadily since the adoption of strong corporate governance mechanism by the corporate world, although the benefits have not been applied to environmental disclosures (Gibassier & Unerman, 2014). In Australia however, corporate houses providing disclosure information about their environmental and social performances are doing so by including a number of reasons.

Although the purpose of corporate governance was to use this as a potential solution for the internal problems, now a broader view is concentrating on protection of the stakeholder’s interests. This raises hope, say (Henderson & Braun (ed.), 2016), that an effective corporate governance system will create a positive effect on the overall performance of the organization, both in the ?nancial as well as the non-?nancial field of reporting (Grigore, Stancu & McQueen (ed.), 2017). Currently, the role of Corporate Governance is being enlarged to encourage the organizations in promoting fairness, ethics, transparency as well as accountability in all the dealings of the organization. This is bound to enhance a disclosure-based environment where administrators will be forced to act in the real interest of both, the shareholders as well as the stakeholders.

3. Environmentally Sustainable Mining:

The Case of Tailings Storage Facilities

Management of the tailings and their frequently occurring negative impact on the ecology of the area and its environment, has recently started posing challenges to the administrators of the mining and mineral industry (Aluchna & Idowu (ed.), (2016). Hence, many administrators as well as researchers, have started concentrating on the most critical area of tailings so as to reduce these mining-related environmental disasters. In the area of iron ore mining, Sulfidic tailings are found in abundance. These contain iron minerals and pyrite, which can react with air and water to produce sulfuric acid and in turn helps in the production of dissolved iron. To counter this chemical change, iron ore mines require large landfill for the storage of tailings, (Schaltegger et al (ed.), 2008).

Since the demand and consumption of natural resources is on an increase and run-of-mine ore grades are dropping, managing a mining project is becoming costly as management is hard-pressed in increasing the production scale and this is potentially impacting those areas of the mining which produce large volumes of waste. Accordingly, improvised ways of disposing tailings is necessary, preferably for removing a large portion of the water accompanying them. In the current mining operations, this has gone up to 70-80% of solids, as compared to 30-50% of solids in previous operations and the most common method of disposal still remains in tailings dams (Henderson & Braun (ed.), 2016).

Managing Tailings Storage Facilities

A series of experiments have concluded that one of the most effective methods for minimizing the negative effect of tailings is recycling of the waste materials. An unfortunate failure of this mechanism is the collapse of the two tailings dams in iron ore extraction mines of Samarco in Mariana, Brazil. Considering that this growing trend of increasing the mining waste generation has become a business-as-usual scenario, it is becoming a certainty that the risk of such dams collapsing will increase in the future, thereby increasing the socio-environmental-disasters which are associated with mining activities (Schaltegger et al (ed.), 2008).

PART – 2: BHP Sustainability Report 2017

Author: BHP Billiton Limited, Australia.

BHP has been a pioneer in setting sustainability targets since 1997. The management has main focus on sustainability in all operations undertaken, be it ore exploration, ore extraction or ore transportation. BHP has been putting safety and health at the forefront, it has responsibility towards environment, and the management respects human rights and supports the host communities. BHP works as a partner with the communities in the areas where the company operates. The company responsibly takes leadership of managing the environment, is foremost in supporting local cultures and is in the forefront in improvising economic development (Aluchna & Idowu (ed.), (2016).

To assess and manage material risks of the business activities, the company’s functions are optimised on the basis of the Risk Management Standards. This helps the management to regularly adopt a risk-based approach towards sustainability. The material risks are assessed in accordance with their potential safety, health, community, reputational, environmental, financial and legal impacts. By embedding the process of risk management into the company’s work processes as well as the critical business systems, the management ensures that their decisions are based on the relevant inputs and up-to-date valid data (Dima (ed.), 2016).

The management is regularly engaged with the stakeholders for understanding the issues related to sustainability which are of their interest and are also important to the business of BHP. By enhancing the management of risk, performance and transparency, and leveraging the technology, BHP always delivers efficient productivity, long-term resilience on its business and endurance of regular environmental and social outcomes (Deegan, 2016). In this context, BHP ensures that all Contractors working at the company’s assets comply with the safety, health, community and environmental standards set by the management. Similarly, all material risks are also assessed in context of the potential safety, health, community, reputational, environmental, financial and legal impacts (Gibassier & Unerman, 2014).

BHP Sustainability Report 2017

BHP seeks the advice of external experts on issues related to sustainability and this is an integral part of the company’s decision-making process. The BHP Forum on Corporate Responsibility is also an integral part of the management’s stakeholder engagement program. The BHP Forum comprises of eight external experts belonging to various fields of sustainability, who are constantly making progressive contribution to the company’s approach towards social and environmental issues. The Forum also provides an insight into the current and as well as the emerging issues, and allows the management in understanding and considering the broader impacts of their actions (Deegan, 2014).

This Sustainability Report of the management also contains certain forward looking statements, which include statements pertaining to management’s strategies, plans and objectives and certain regulatory developments. These statements also discuss the future expectations and also provide forward looking information. Although, these forward looking statements do not guarantee or predict about the future performance and unknown risks and uncertainties, as many of these may be beyond the control of the management and may become the cause of actual results in differing from those which are expressed in the statements given in this Sustainability Report (Dima (ed.), 2016).

BHP management believes that the past performance cannot be considered as a guide for the future performance. The recent tragedy of tailings dams in Brazil has shown that all tailings dams require constant maintenance and monitoring. Hence, the management’s focus has now shifted more towards governance, risk identification and monitoring programs. The management has created a NOJV Leadership Team as well as a supporting team and these two shall be the management’s single window of accountability for all NOJVs (Aluchna & Idowu (ed.), (2016).

References

Aluchna, M. and Idowu, S.O. (ed.) (2016) The Dynamics of Corporate Social Responsibility: A Critical Approach to Theory and Practice. New York: Springer.

Deegan, C. (2014) Financial Accounting Theory. Melbourne, VIC: McGraw-Hill Education Australia.

Deegan, C. (2016) Financial Accounting, (8^th ed.) Melbourne, VIC: McGraw-Hill Education Australia.

Dima, J. (ed.) (2016) Comparative Perspectives on Global Corporate Social Responsibility. Hershey, PA: IGI Global.

Gibassier, D. and Unerman, J. (2014) Sustainability Accounting and Accountability, (2^nd ed.) Oxon: Routledge.

Grigore, G., Stancu, A. and McQueen, D. (ed.) (2017) Corporate Responsibility and Digital Communities: An International Perspective towards Sustainability. New York: Springer.

Henderson, G.L. and Braun, M.J. (ed.) (2016) Propaganda and Rhetoric in Democracy: History, Theory, Analysis. Carbondale: SIU Press.

Islam, M.A. (2014) Social Compliance Accounting: Managing Legitimacy in Global Supply Chains. New York: Springer.

Schaltegger, S., Bennett, M., Burritt, R.L. and Jasch, C.M. (ed.) (2008) Environmental Management Accounting for Cleaner Production. New York: Springer Science & Business Media.