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CSR Activities Of BHP Billiton Limited

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Question:

Discuss about the Corporate Social Responsibilities Of BHP Billiton Limited.
 
 

Answer:

Introduction

BHP Billiton is a multinational Anglo-Australian metals, mining and petroleum listed public organization which has its headquarters in Melbourne and is the chosen company for the report. It was founded in the year 1885 and in 2015 it became the world’s biggest mining organization considering market values (Ore, 2014). BHP Billiton was formed in the year 2001 merging two companies namely the Australian Broken Hill Proprietary Company Limited (BHP) and the Anglo–Dutch Billiton plc. Bilton is on the list of 90 organizations which market and extract fossil fuel and is responsible for two thirds of the worlds greenhouse gas. It is the 19th biggest polluter in the world. This essay looks into how the company plans its Corporate Social `Responsibility and executes it so as to minimize the damage done to the environment. It also shows how the media plays an important role in promoting the CSR activities of the organization.

Integrating CSR and Issues Management

Corporate Social Responsibility is a type of self-regulation for corporate which have been incorporated in a business model. These are a company’s initiatives which help them asses and shoulder responsibilities for the organization’s social and environmental well being. These efforts generally go beyond what environmental groups and protection regulators try to do (Crane, Matten & Spence, 2013). CSR involves spending money without any financial benefit to the company in the short term . It instead is used to promote positive environmental and social changes.

Huge companies especially the ones in heavy industry can have adverse effects on the environment. Spilling of oil in seas and oceans are the most common examples but industries such as mining, agriculture, chemical making can lead to irreparable damage to the environment. Sometimes these can lead to climate change also. While some of the everyday necessities like electricity and transportation are due to these industries there many others who have just grabbed a lot of money from the environment’s decay (Yakovleva, 2017).

On many occasions harm to men and environment happen simultaneously. There were groups in the Amazon rainforest who have been completely wiped off for gold mining, oil and gas drilling and to generate hydroelectric power.

In light of these cases companies have now started to embrace a culture which balances the need for profit with a commitment to maintaining and preserving nature. In short the funds which inflict damage to environment and society also allows the companies to have positive changes on the environment. These companies can also use their power to pressure governments and other organizations to use resources ethically (Savitz, 2013).

Many organizations today are therefore using the tagline of ‘triple bottom line: social, economic and environmental- or simply ‘people, planet and profit” to focus on the importance of preserving the environment (Gimenez, Sierra & Rodon, 2012).

 

Issue Management

In a project’s life cycle there are always unwanted and unexpected problems which pop up from time to time. When these things crop up the company has to deal with those otherwise they can damage the project’s outcome. Most of the issues faced in a project are more or less unexpected and ideally there should be team to address it as soon as possible so that the deadlines and objectives can be met (Cho & Kim, 2012). Problems such as shortage of staff, suppliers, materials and technical failures can all have an adverse impact on the project if they remain unresolved. Then again issues and risks are not quite the same thing. Issues cannot be predicted, like for example finding a replacement for a staff who has left the company is an identifiable risk (Wu, Chen & Olson, 2014). On the other hand however, a staff is involved in an accident and is hospitalized for a month that becomes an issue.

In recent times supply chains are quite the central focus in Corporate Social Responsibilities. As part of it the company might take in a lot of people to diversify and empower its workforce. They might also pay generous amounts for maternity and paternity leaves or accidental leaves. These however, cannot change the fact that the raw materials for these industries are purchased from places which use child labour.

For example, the diamond industry has received a lot of flak from injustices in its supply chain. ‘Conflict Diamonds’ are usually plucked from places ravaged by war where groups usually fund their campaigns through excavating these precious stones often using child labour from areas such as Angola, Zimbabwe and Ivory Coast.

CSR within the organization

BHP states its CSR Policy as a requirement for addressing risks (Hilson, 2012). It also states that it has zero tolerance for the use of child labour, forced or compulsory labour, mistreatment of employees, living wages, workplace health and safety, freedom of association, world heritage sites and protected areas, biofuels, corruption, bribery and extortion, compliance with laws, discrimination, indigenous rights and the environment. BHP also voluntarily gives away one percent of its profit in programs for communities. It has made 241.7 million of community donations which includes a 100 million dollar contribution towards BHP Billiton charity.

CSR does a lot of things for the company and therefore organizations nowadays want to spend on these activities so that they can get some mileage out of it. First of all it improves public image of the organization. They can do it by supporting non-profits by giving steady partnerships, monetary donations, volunteerism, in-kind donations of services and products. By means of publicity and general awareness organizations increase their chances of becoming favourable in the eyes of the buyers.

CSR also increases media coverage of a company which in turn helps in highlighting the work that the company is doing. Media usually pick up the good things that a company does and highlights them in their space. However, even negative community impacts are highlighted by the media which in turn affects the company adversely.

CSR also helps in boosting employee engagement. When organizations try and improve their communities through corporate giving programs they are likely to retain and attract workers. These activities also help retain and attract investors. When a company invests in a CSR activity it shows the investors that it is not just bent on making money.

The Communication activities which should be adhered to by the company is that they should always remember that negative reports spread faster than positive ones which is risk while communicating CSR. However, many believe that companies who do not exaggerate or hide their activities have nothing to fear. Firstly, there is nothing to be afraid of the media (Zyglidopoulos et al., 2012). There are managers who believe that media is always out to get them and are only interested in bad news. However, that is not the case. Most managers say that the media report their stories correctly. Also big issues need to be tackled head on. The company should respond to its stake holders and see what they are asking for. Communicating to them what they are interested in will help in eradicating ‘greenwashing’(Nyilasy, Gangadharbatla & Paladino, 2014).

The organization should also never represent itself as a picture-perfect one. Stakeholders can get very skeptical if everything looks rosy from the top. Corporate communications should therefore present CSR activities integrating them into the organization’s business and not show them as the company’s sole purpose.

Communicating CSR should not only be the job of the corporate communications branch but also of the whole organization. While the communication department can only tell the story of the CSR to the world, the rest of the company must make the world believe in the message.

There are always CSR issues which a company needs to manage . First is child labour. It is clearly stated in the company’s website that children below the age of 15 cannot work in the organization. Therefore they need to see that it is not violated through out all the plants that they have. Also, there should not be any forced or compulsory labour which violates the essential freedom of an individual.

 

Role of CSR Issue Management

BHP Billiton can face CSR issues in terms of customer or community conviction. Moreover, the customers and community are less likely to believe on the good benefits of CSR issues, if it is not associated with instant affect. The CSR issue related to customer and community conviction can actually hamper the reputation the brand in the market. On the other hand, in CSR practice, BHP Billiton is more likely to share all kinds of information among the stakeholders, whether it is positive or negative. In such situation, the reputation of the organization is vulnerable to breakthrough, if any negative information about the business in communicated among the stakeholders. Therefore, the organization should immediately manage the CSR issues related to leak out of negative information. Furthermore, BHP Billiton often fails in meeting the expected CSR needs of the customers, community and other stakeholders. The reputation of the organization can also be hampered, when the CSR programs cannot meet the actual expectation of the stakeholders.

The organization can effectively manage the media and internet for managing the CSR issues. Moreover, role of CSR issues management is to protect the reputation of the organization in the market. Moreover, the organization can know about the trends and wants of their stakeholders towards knowing their CSR expectation. In this way, the organization will be better able to meet the CSR needs of the stakeholders. On the other hand, strong media relation will less spread the negative information of the organization, which can protect the image and reputation of the customers. In this way, strong media relation in CSR issue management will help the organization in making sustainable image and reputation in the market.

 

Communicating to stake holders

A very key issue in communicating CSR initiatives to stake holders is to make these initiatives sound as they matter. This should be highlighted in such a way so as to see that its not just another part of the company. However, in highlighting these events, that is if they are done very aggressively companies face the risk of getting opposite of the desired result. This is known as a boomerang response. Given the common mass’s distrust in major organizations it is not unreal for a company to think that the stakeholders will perceive those attempts to highlight CSR as ‘greenwashing’.Greenwashing in its truest sense refers to using environment to highlight that a company’s products and policies are eco-friendly. In the broader sense greenwashing describes PR which usually aims at giving false impression that an organization is whole heartedly interested and doing CSR (Walker & Wan, 2012). There are also concerns about companies which are genuinely focused in CSR can be taken cynically by the stakeholders. This is because stakeholders do not get to witness the CSR in front and have to rely on the company’s own reporting. A key issue for managers, is to minimize stakeholders fear and communicate CSR without being accused of greenwashing (Vries et al., 2015).

Therefore communication to stake holders should be very clear and loud. The extent of the CSR activities which are highlighted should be put to the stakeholders in a way that they look believable. Suppose if a company is sponsoring the education of 600 underprivileged kids in Africa it should not resort to stating that it is helping children all over. Another example can be the company spends on biotoilets in remote areas, then it should obviously state exactly the number of toilets it has created so far in those places. The company should also be careful about highlighting itself in front of those stake holders (Costa & Menichini, 2013). The organization should not adhere to window dressing showing itself to be something it is not. The company should always clearly mention, its history, its funding, and the state in which it is now.

A company with good corporate social responsibilities has these attributes: Understanding of key environmental and social issues which are of prime concern to the stake holders. Accepting the necessity of communicating CSR without bragging. Understanding how CSR adds a lot of value to the goodwill of the company. Also there are a few essential ways to communicating CSR: Cutting out the PR fluff and keeping it accurate and factual. To ensure message sent to the stake holders are consistent. Using data to state what the company has achieved. Explaining how action in the company can be of value to the organization.

BHP Billiton has also adopted a corporate governance framework that is designed to ensure:

Timely and accurate information regarding BHP Billiton, including its financial situation, performance, ownership.

Strategies, activities and governance is provided equally to all shareholders and market participants.

Channels for disseminating information are adopted which are fair, timely and cost-efficient; and

It does not communicate material price, or value, sensitive information to any external party prior to that information

Being disclosed to all shareholders and market participants in compliance with its continuous disclosure obligations.

There is always the most necessary need of bridging the portrayal gap. Communications with positive outcomes that tend to put a gloss over the negatives or contain incorrect data can create mistrust and damage the reputation of the company (Tai & Chuang, 2014). It is therefore very necessary to check those issues and address them so that the facts are represented faithfully. If it does not happen the media can expose these and result in portrayal gap where there is a difference in how an organization portrays itself and how it is seen externally.

Communications with stakeholders is another very important factors these days as businesses need them to work in a global environment. Effective communication is therefore an essential part of not only developing a strategy which can be responsive to environmental and social risks and opportunities and delivering on that strategy.  It also influences the organisation’s culture.

Many activities in which organizations engage in, such as employees working for social good and equal opportunities initiatives, are an important part of that transformation, changing the way employees think and behave both at work and home.  They also change broader perceptions about the company.

 

The overall communication

The overall communication at BHP Bilton is doing well in passing on the information to the key stakeholders of the company. The CSR team too has carefully addressed the fact that it needs to highlight the fact on how the company is giving back to the environment in a way that the depletion seems less.

The company can however, have a management team in place that only looks into the CSR commitments of the company. The company can take the initiative also of planting more trees or have ‘green zones’. Green zones are usually huge acres of land where a company takes the initiative of planting trees (Sung & Hwang, 2013). Usually heavy industries which take a toll on the environment tend to use this strategy so as that they can give back the environment what they are depleting (Pellegrino & Lodhia, 2012). There are already a few such zones in Australia and BHP can look to further add to those. They can start off by creating a nursery of plants and slowly grow. The nursery should have all types of plants from where people can buy too. Hoardings supporting the same cause can be put across the country so as to highlight this CSR activity with the tag line of ‘What we take, we give double.’

The second initiative can be an eco-friendly fuel that can help cars and buses run without much pollution (Panwar, Kothari & Tyagi, 2012). Since the company is into mining and making petroleum based products they can used their scientists to have a look into this idea. They can start of by making it in the labs and then promoting or testing it in villages that necessarily do not have much access to petrol or diesel. Once they are successful they can bring it to the cities and promote it. In the cities they will be able to sell it too as a better alternative to petrol and diesel and highlight the fact how it cuts down the air pollution levels.

Conclusion

It can be clearly seen that a company which is into mining and heavy industries has a very transparent identity at the corporate levels. The researches, data and surveys which have been  collected from 2014 shows that the company has clear goals and visions regarding the CSR activities in the future. It is in the Forbes list of top companies which goes to show that the company stands firm on its ground and enjoys quite a good reputation among its stakeholders.

 

References:

Cho, S., & Kim, Y. C. (2012). Corporate social responsibility (CSR) as a halo effect in issue management: public response to negative news about pro-social local private companies. Asian Journal of Communication, 22(4), 372-385.

Costa, R., & Menichini, T. (2013). A multidimensional approach for CSR assessment: The importance of the stakeholder perception. Expert Systems with Applications, 40(1), 150-161.

Crane, A., Matten, D., & Spence, L. J. (2013). Corporate social responsibility in a global context.

de Colle, S., Henriques, A., & Sarasvathy, S. (2014). The paradox of corporate social responsibility standards. Journal of Business Ethics, 125(2), 177-191.

Gimenez, C., Sierra, V., & Rodon, J. (2012). Sustainable operations: Their impact on the triple bottom line. International Journal of Production Economics, 140(1), 149-159.

Hilson, G. (2012). Corporate Social Responsibility in the extractive industries: Experiences from developing countries. Resources Policy, 37(2), 131-137.

Lodhia, S., & Martin, N. (2014). Corporate sustainability indicators: an Australian mining case study. Journal of cleaner production, 84, 107-115.

Nyilasy, G., Gangadharbatla, H., & Paladino, A. (2014). Perceived greenwashing: The interactive effects of green advertising and corporate environmental performance on consumer reactions. Journal of Business Ethics, 125(4), 693-707.

Ore, B. B. I. (2014). Health & Safety, Crisis and Emergency Management Version 2.0.

Panwar, N. L., Kothari, R., & Tyagi, V. V. (2012). Thermo chemical conversion of biomass–Eco friendly energy routes. Renewable and Sustainable Energy Reviews, 16(4), 1801-1816.

Pellegrino, C., & Lodhia, S. (2012). Climate change accounting and the Australian mining industry: exploring the links between corporate disclosure and the generation of legitimacy. Journal of Cleaner Production, 36, 68-82.

Savitz, A. (2013). The triple bottom line: how today's best-run companies are achieving economic, social and environmental success-and how you can too. John Wiley & Sons.

Schmitt, A., & Raisch, S. (2013). Corporate turnarounds: The duality of retrenchment and recovery. Journal of Management Studies, 50(7), 1216-1244.

Sung, H. C., & Hwang, S. Y. (2013). A Preliminary Study on Assessment of Urban Parks and Green Zones of Ecological Attributes and Responsiveness to Climate Change. Journal of the Korea Society of Environmental Restoration Technology, 16(3), 107-117.

Tai, F. M., & Chuang, S. H. (2014). Corporate social responsibility. Ibusiness, 6(03), 117.

Vries, G., Terwel, B. W., Ellemers, N., & Daamen, D. D. (2015). Sustainability or profitability? How communicated motives for environmental policy affect public perceptions of corporate greenwashing. Corporate Social Responsibility and Environmental Management, 22(3), 142-154.

Walker, K., & Wan, F. (2012). The harm of symbolic actions and green-washing: Corporate actions and communications on environmental performance and their financial implications. Journal of business ethics, 109(2), 227-242.

Wu, D. D., Chen, S. H., & Olson, D. L. (2014). Business intelligence in risk management: Some recent progresses. Information Sciences, 256, 1-7.

Yakovleva, N. (2017). Corporate social responsibility in the mining industries. Routledge.

Zyglidopoulos, S. C., Georgiadis, A. P., Carroll, C. E., & Siegel, D. S. (2012). Does media attention drive corporate social responsibility?. Journal of Business Research, 65(11), 1622-1627.

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