Assessment of Administration and Planning Activity

Discuss about the Assessment of Administration and Planning Activity.

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.

• 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.

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.

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. ·        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.	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 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).

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 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:

• 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 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 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).

Corporate sustainability and corporate strategy both are considered as two sides of same coin. Corporate strategy defines the business model which enhances the financial performance as well as social and environmental performance. Wrong definition is originated by economics which state that environment and social issues are external issues, but in actual these issues are not external as it directly affects the ability of the company. BHP must focus on their operational efficiency while framing corporate strategy and include the short term goals related to social and environmental efficiency. Inclusion of short term goals in corporate strategy helps the company in improving their operational efficiency and also meets long term goals of the company. BHP can plan for programs and policies which help in preventing the fatal incidents occurred while company operating its business. For arranging these programs BHP clearly wants funds and resources which can be available from good financial performance only.

• Including sustainability into corporate strategy: redefining strategy which also includes factors related to environment and social implications in association with financial value has potential to lead the corporation to strategic position. For the purpose of establishing sustainable business model, it is necessary that company must engage in social and environmental domain that is usually new and unfamiliar for company. These factors have direct impact on the working management of the company and it help in human capital recruitment and retention.

Business must consider the right knowledge and skill which is possessed by business leaders while solving these issues. Corporate strategy must be of such nature which help the business in understanding their role in society, and which also help the company in gaining lead position in the society by fulfilling the expectations of the society. BHP does not indulge any factor related to environment and social issues in its corporate strategy which reduce the efficiency of company in meeting the expectations of society.

• Considering issues related to waste occurred rom mining: there is one more issue related to mining industry and that is toxic mining waste. A company engaged in mining activities does not report about the toxic waste they dumped in the environment, and whether doing so they kept the public in dark. This happens because sustainable mining only goods look on paper and it seems easy to follow the federal and provincial guidelines, but in actual these things do not follow in practice. BHP also fails to provide any strategy which deals with the toxic waste and also method through which such waste is reported (Mining, 2014; Jureiti, Mandelli & Fuduric, 2017).

It must be noted that mining also present some other hazard to the environment, and it can considered as troll for public health if appropriate measures are not taken for ensuring that process of mining is done safely and efficiently as possible. Case studies related to mines in world reflect various stories of success or corporations as well as private companies, as these stories also help in building new construction infrastructure from reusable materials. This can be understood through example aluminum can be substituted as recyclable material instead of using bauxite ore because it is rare and less reusable item.

BHP can frame strategy through which it notice the small details related to the used products and those products also which generated at mine site, and by included these factors BHP can achieve its target of Sustainability Company. BHP can use various tricks such as it recycles the copper as it takes seven times less energy in processing the ore, recycling the steel as it takes three times less energy in processing the ore, and etc. these things help the BHP in create more positive impact on environment.

By adopting these recommendations, BHP can frame its strategy related to corporate sustainability and lead to strategic position. Above stated recommendations require lot of changes in the current strategy of the BHP Billiton which are both transformational and incremental in nature changes such as including sustainability into corporate strategy is considered as transformational change while other recommendations only requires incremental changes in strategy. BHP mainly focuses on long term goals which include plans for 3-5 years, but after adopting these recommendations BHP can focus on short term goals which not only increase the goodwill of the company but also help the company in meeting their long term objectives (Semeraro, Boyd, Filho, Sima, n.d.).

This new strategy provides various benefits to the society and also to the corporation as well, and these benefits are stated below:

• These recommendations help the BHP in meeting their targets which they framed for social and environmental issues, also help the company in meeting their long term goals stated under current corporate strategy.
• This will reduce the negative impact of mining industry on environment and health of people (The Guardian, 2014).
• These changes in the strategy not only increase the goodwill of the company but also fulfill the expectation of the society which directly effects the financial position of the company.
• By recycling the waste and other produced material, BHP can reduce its cost of operations and increase its profitability.

Conclusion:

After considering above facts it is clear that corporate sustainability strategy of BHP is working well but it still required some transformational as well as incremental changes. 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.

BHP argues that current sustainability strategy of the company mainly framed for achieving these targets:

• Strategy considers cardinal wellness, safety of workforce, environment protection, community and socio economic hazards, etc.
• Increasing shareholders value in the long run.

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. 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. Company recognizes its responsibilities for addressing the risk related to climate change. Therefore by adopting above stated provisions company can achieve its sustainability position.

References:

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Akhavan, R. Beckmann, M. (2017). A configuration of sustainable sourcing and supply management strategies. Journal of Purchasing and Supply Management, vol 23 (2), 137.

BHP Billiton, (2007). BHP Billiton Sustainability Report Full Report 2007. Retrieved on 24^th October 2017 from: http://www.bhp.com/-/media/bhp/documents/investors/reports/2007/sustainabilityreport.pdf?la=en.

BHP Billiton, (2015). Taking the long view Sustainability Report 2015 BHP Billiton Chile. Retrieved on 24^th October 2017 from: http://www.bhp.com/-/media/bhp/documents/society/reports/2016/160509_sustainabilityreport2015_chileanoperations.pdf.

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Jureiti, E. Mandelli, A. & Fuduric, M. (2017). How do virtual corporate social responsibility dialogs generate value? A case study of The Unilever Sustainable Living Lab. Volume 24(5), Pp- 399.

Kamp, D. (2003). Discovering Participatory Development Through Corporate – NGO Collaboration: A Mining Industry Case Study. Retrieved on 24^th October 2017 from: http://www.csrm.uq.edu.au/docs/Paper2DKemp.pdf.

Mining, (2014). Top 10 ways to make mines. Retrieved on 24^th October 2017 from: http://www.miningglobal.com/top-10/top-10-ways-make-mines-more-environmentally-friendly.

PWC. Strategic sustainability. Retrieved on 24^th October 2017 from: https://www.pwc.com/gx/en/services/sustainability/responsible-corporate-strategy.html.

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Semeraro, E. Boyd, N. Filho, W. Sima, W. An empirical assessment of administration & planning activity and their impact on the realization of sustainability-related initiatives and programs in higher education. International Journal of Sustainability in Higher Education, 2017, 00.

The Guardian, (2013). BHP Billiton: climate change leader or laggard?. Retrieved on 24^th October 2017 from: https://www.theguardian.com/sustainable-business/blog/bhp-billiton-climate-change-leader-laggard.

The Guardian, (2014). Corporate strategy in the age of sustainability. Retrieved on 24^th October 2017 from: https://www.theguardian.com/sustainable-business/blog/corporate-strategy-sustainability-trend.