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Ensuring sustainable global development
This Case Study profiles how BHP Billiton has promoted and maintained sustainable development and socio-economic sustainability.
As a result of reading this Case Study, the student should be able to:
- Explain the concepts of sustainable development and socio-economic sustainability and outline the relationship to corporate citizenship
- Describe how BHP Billiton deals with socio-economic sustainability with reference to employee relations, supply, and economic contributions to the host community
- Discuss the benefits to BHP Billiton and its host communities of the socio-economic sustainability programs
- Justify different strategies that can be used by a business to be classified as an ethical global business.
Join us in a journey; a journey embracing a range of cultures and an opportunity to meet the locals.
For BHP Billiton, sustainable development is about ensuring its business remains viable and contributes lasting benefits to society through the consideration of social, environmental, ethical and economic aspects in all that it does.
With socio-economic sustainability in mind, let's now embark on our travels with BHP Billiton.
Off to Canada: The glitter of underground diamonds.
Over to South Africa: Black Economic Empowerment Procurement Policy.
Across the South African border to Mozambique: Starting from scratch.
Back in Australia: Doing business.
BHP Billiton takes its ethical and social responsibilities seriously, and it demonstrates this by investing significant time, money and resources in numerous sustainable development and socio-economic programs.
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Our host for the journey is BHP Billiton, the world's largest diversified resources company. Our travels will showcase the socio-economic dimensions of BHP Billiton's sustainable development approach to business; an approach that delivers benefits to the people and communities in which the company operates. Along the way we will explore the activities of BHP Billiton employees, suppliers, and customers and see how the company contributes to the societies and economies in which it operates.
Before embarking on our journey, let's examine our host and travel companion. BHP Billiton has approximately 37,000 employees working in more than 100 operational sites and offices in approximately 25 countries. The company aims to be the premier global commodity business, with commodities including aluminium, energy coal and metallurgical coal, copper, manganese, iron ore, uranium, nickel, silver and titanium minerals. BHP Billiton also has substantial interests in oil, gas, liquefied natural gas and diamonds.
BHP Billiton's purpose is to create long-term value through the discovery, development and conversion of natural resources, and the provision of innovative customer and market-focused solutions. Throughout BHP Billiton's operations there is an overriding commitment to health, safety, environmental responsibility and sustainable development.
BHP Billiton is a dual-listed company comprising BHP Billiton Limited and BHP Billiton Plc. Its primary stock exchange listings are on the Australian and London stock exchanges. The two entities operate as a combined group known as the BHP Billiton Group. Both companies have identical boards of directors and are run by a unified management team. Shareholders in each company have equivalent economic and voting rights in the BHP Billiton Group as a whole.
Where do the BHP Billiton commodities end up? Key markets are refiners and processors of raw materials, such as steelworks, smelters, petroleum refiners, thermal power stations and diamond cutters.
BHP Billiton deliberately aims to have a range of markets and countries of operation to enhance the stability of cash flows and its capacity to invest and grow throughout the business and commodity price cycles. This stability also enables the company to take a longer-term approach to all aspects of business including social and environmental perspectives.
BHP Billiton's approach
BHP Billiton's Sustainable Development Policy stresses the company's aspiration of "zero harm to people, our host communities and the environment". Further, BHP Billiton strives "to achieve leading industry practice. Sound principles to govern safety, business conduct, social, environmental and economic activities are fundamental to the way we do business." The policy goes on to identify a number of related aspects including socio-economic considerations. For example:
- "Do not compromise safety values, and seek ways to promote and improve the health of the workforce and community
- Understand, promote and uphold fundamental human rights within our sphere of influence, respecting the traditional rights of Indigenous peoples and valuing cultural heritage
- Encourage a diverse workforce and provide a work environment in which everyone is treated fairly, with respect and can realize their full potential
- Engage regularly and openly and honestly with people affected by our operations, and take their views and concerns into account in decision-making
- Develop partnerships that foster the sustainable development of our host communities, enhance economic benefits from our operations and contribute to poverty alleviation."
The socio-economic sustainability aspects of BHP Billiton's operations relate to how the company manages its people and how it contributes to the communities and economies in which it operates. There are three strands to BHP Billiton's socio-economic sustainability approach:
- Employee relations
- Economic contributions.
Strand 1: Employee relations.
BHP Billiton is committed to providing a workplace in which individual differences are valued and all employees have the opportunity to realise their potential and contribute to the achievement of business objectives. While BHP Billiton adopts equal employment opportunity (EEO) principles, it recognises that affirmative action may be required to address historical imbalances and past discrimination. The company strives to train and employ local people with BHP Billiton being committed to working with employees to develop career paths that will enable them to achieve job satisfaction and maximise their contribution to the company.
Strand 2: Supply.
BHP Billiton recognises the value to local economies that can be delivered through its activities. Consequently it seeks to encourage the development of local contractors and the use of local suppliers wherever possible.
BHP Billiton's objective is to ensure that health, safety, environment and community (HSEC) standards and procedures adopted by suppliers, contractors and business partners within thesupply chain are consistent with the BHP Billiton standards.
Strand 3: Economic contribution.
When natural resources are extracted, the impact on local communities and the economy in general can be significant. Consequently the company recognises it has a role to play in assisting mineral-rich countries to achieve broad-based economic growth and sustainable development.
Relationship building in Australia
Australia: Relationship building.
Key focus - Employee Relations and supply in action
Imagine - farms that grow crops such as wheat and oats, a few have sheep and cattle but in all there are only about 100 people. Located near beautiful coastline with a diversity of plants and native animals and birds, life is peaceful... and along comes a large mining company with a proposal to mine nickel for the next 25 years. What do locals do - embrace the change? A challenge for BHP Billiton has been to develop a mining operation within this community of farmers, retirees and summer tourists, who are naturally protective of their rural and regional lifestyle.
Since 2002, BHP Billiton has been addressing the local socio-economic issues that will arise from the construction of a new mine and processing plant close to the towns of Ravensthorpe, Hopetoun and Esperance in Western Australia.
With its Sustainable Development Policy firmly at the forefront, BHP Billiton engaged regularly, openly and honestly with people who will be affected by its operations. The company has undertaken numerous programs in order to build positive relationships with the small regional communities.
Locally-based workforce - BHP Billiton estimates 300 people will be directly employed and, given the life of the mine is expected to be 25 years, a locally-based workforce is preferred. This is in contrast to the operation of a number of mines in which workers are not local and instead fly in and out, as required.
BHP Billiton has encouraged local and regional businesses to participate in the construction phase. Three business chambers are working with the company to help members adapt their businesses to the long-term needs of the company.
In all there will be more jobs, greater potential for local businesses and greater opportunities for young people.
Community consultation and involvement - BHP Billiton has established two local committees to assist community participation in the decision-making process. The Community Liaison Committee (CLC) helps to reduce potential tensions as many new families move into a small community that has changed little for decades. The CLC also looks at sponsorship applications from the local community and makes recommendations on how the company should allocate these funds.
The second committee is the Jerdacuttup Ravensthorpe Nickel Operations Working Group (JRWG). It ensures that no social or environmental harm occurs as a result of the project's operations with emphasis given to air quality, farm values and groundwater, soil and vegetation programs. Members of the committee include seven farmers and a Jerdacuttup primary school representative. The JRWG has undertaken a number of studies including work relating to surface water flow predictions, soil and vegetation programs and tailings storage.
BHP Billiton is not going it alone. It is working with the local community and state and federal governments to maximise opportunities for the local community. BHP Billiton's socio-economic sustainability aims as indicated by the strands of employee relations and supply are self evident; in addition the economic contribution will result in long-term sustainability for the local community.
Diamond mining in Canada
Key focus - Employee relations in action
EKATI training program promotes sustainable new careers in the emerging Canadian underground diamond mining industry.
At BHP Billiton's EKATI Diamond Mine in Canada's North West Territories a training program has been established for underground miners. The program is aimed at providing opportunities for Northern Aboriginal people to participate in the growing number of new jobs associated with underground diamond mining.
Each trainee receives eight weeks on-site training consisting of approximately 80 percent hands-on training in the field and 20 percent classroom training, including one-on-one and computer-based training. Two qualified underground trainers provide the hands-on and classroom training and ensure all candidates are closely monitored and evaluated as they progress through the program. Trainees are guaranteed to be hired full-time if they successfully complete the training program.
BHP Billiton adopts a proactive approach to skills development. Jobs are created, including the employment of Indigenous peoples and the socio-economic sustainability strand relating to employees and equal opportunity is put into practice. In addition, employees can develop career paths as successful trainees are encouraged to participate in further training programs.
Black economic empowerment in South Africa
Key focus - Supply in action
In past years, if you were black and lived in South Africa, you were often excluded from participating in the workforce in a meaningful way. To many, life offered little hope. Black Economic Empowerment (BEE) laws have been introduced to address inequalities. BHP Billiton is responding through the implementation of its BEE Procurement Policy and the establishment of a central BEE Supply Unit. The Policy attempts to address the socio-economic imbalance by increasing the participation of previously disadvantaged groups.
Many organisations supply a range of goods and services to BHP Billiton. A BEE Supply Unit was established to:
- Give black suppliers the opportunity to supply to BHP Billiton
- Ensure that all buying organisations within BHP Billiton have the support to successfully achieve legislated procurement targets.
BHP Billiton promotes BEE spending in three main ways.
- Transforming suppliers - initiating forums with existing suppliers in order to make them aware of the components of the BEE Procurement Policy
- Targeting existing & new BEE suppliers - identifying specific opportunities for the entry of BEE suppliers and assisting and developing these suppliers
- Building capacity - promoting and supporting local supply opportunities to small to medium-sized enterprises (SME's).
BHP Billiton provides 50 percent of the funding required for the training of BEE suppliers. The company puts its policy into action assisting small and medium-sized businesses, including those in local communities close to its operations. It develops partnerships that foster the sustainable development of host communities and help reduce poverty.
Starting from scratch in Mozambique
Key focus - Employee, supply and economic contribution in action
From its earliest days, the Mozal aluminium smelter project in Mozambique presented BHP Billiton with a number of significant challenges. One of the world's poorest countries, there was poorly developed infrastructure, limited numbers of people with training and skills, and malaria and HIV/AIDS were prevalent.
With the motto 'Together we make a difference' BHP Billiton instigated a wide-ranging program of health, safety, environment, community and socio-economic initiatives including:
- Setting up health-related programs and facilities for malaria prevention, HIV/AIDS, and maternal and child health
- Improving educational facilities in the region with the rebuilding of the primary school, the provision of the first-ever secondary school, support for training of school teachers, funding for new facilities in an agricultural school and the donation of exercise books to disadvantaged children
- Establishing various training programs and facilities to maximise the number of local people in the workforce, e.g. mechanical and electrical maintenance, and construction workers. Other training opportunities, e.g. degree and post-graduate education and overseas assignments are arranged for employees to prepare them for promotion. 93 percent of the 1105 permanent staff at the mine is Mozambican
- Developing houses within the vicinity of the smelter
- Providing infrastructure such as roads and bridges, water and electricity supply, and telephones
- Assisting local SME's to successfully compete for contracts by offering training in tendering for and carrying out contracts. Some work packages are for the exclusive tender of Mozambican SME's and an SME Development Centre was established to train SME's in best practice in the supply of goods and services to the smelter and to assist with staff safety
- Providing families with income-earning activities, e.g. training women in chicken raising and providing the chicks; and training farmers in cashew nut production and providing the cashew trees. And then it's off to the local market; the market being created with assistance by the smelter.
The Mozal aluminium smelter project in Mozambique is a model for sustainable long-term investment based on sound business principles that encompass the recognition and effective management of social and environmental responsibilities. People are employed directly by the smelter, in the supply chain process and economic benefits are generated.
Doing business in Australia
Supply in action
BHP Billiton wants its suppliers to understand and respect its business conduct standards and for them to realise that compliance with these and ensuring high ethical standards are non-negotiable. They must be understood and practiced by employees, contractors and suppliers.
A key event in this regard was a Global Supplier Forum BHP Billiton held in Melbourne in February 200It included a session on the value of ethics and its expectations and requirements regarding ethics and business conduct in the supply relationship.
BHP Billiton's Charter forms the foundation of its corporateculture and principles of business conduct. It states that high standards of business conduct, including honesty and integrity, are required in all its dealings.
BHP Billiton's Guide to Business Conduct provides a basis for achieving the expected standards. The company requires systems to be in place at all its operations to ensure that employees and contractors are familiar with, and abide by, the requirements of the Guide.
There is strong commitment at the highest levels of BHP Billiton that its business conduct principles are understood and practised not only by its employees and contractors but also by its suppliers.