Principle number 1: achieved through perception of one’s self as connected to others

As a principle, the perception of connection to others was translated into several sub- principles in corporate setting, as explained in Chapter 3. The translations were based on Wicks, Gilbert and Freeman’s (1994) interpretation of the stakeholder concept from a feminist perspective.

Sub-principle (a): Corporations are webs of relationships among stakeholders Stakeholders are defined as ‘people who are adversely or positively impacted by our

operations, those who have an interest in what we do, or those who have an influence on what we do’ (2006 Sustainability Report, p. 109). They are explicitly mentioned in the Company’s annual and sustainability reports, along with the approach taken to engage with them. The Company’s stakeholders are:

 investment community,  shareholders,

 customers,  media,

 business partners,

 employees and contractors,  local and indigenous community,  industry associations,

 suppliers,

 governments and regulators,  non-government organisations, and  labour unions.

These stakeholders are engaged through an effective “stakeholder relationships program” which is crucial to BHP Billiton in order to:

1. Maintain the licence to operate

2. Ensure access to resources and future business opportunities 3. Enhance and protect the corporate reputation

4. Mitigate potential social, environmental and business risks. (2007 Sustainability Report, p. 245)

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Furthermore, BHP Billiton states that its success in creating value is when:

• our shareholders are realising a superior return on their investment

• our customers and suppliers are benefiting from our business relationships

• the communities in which we operate value our citizenship

• every employee starts each day with a sense of purpose and ends each day with a sense of accomplishment. (2006 Sustainability Report, p. 4)

The consideration of relationships as primary to the feminist ethics of care is reflected in BHP Billiton’s stakeholder relationships, which are performed through regular and transparent communication. This is explained as follows:

We engage regularly, openly and honestly with our host governments and people affected by our operations and take their views and concerns into account in our decision-making ... Engaging openly with our host communities, governments and other key stakeholders is critical if we are to make a positive contribution to the lives of people who live near our operations and to society more broadly. Only through meaningful engagement are we able to understand and address potential impacts and concerns about our projects and operations and create opportunities that are aligned with the interests of the affected people. (2011 Sustainability Report, p. 18)

The excerpt from the 2011 Sustainability Report shows the open and honest engagement BHP Billiton has with its stakeholders. The stakeholder relationships are maintained through the stakeholder engagement method, as depicted in Table 5.1.

Table 5.1 The stakeholder engagement method

Stakeholder Interest Engagement methods

Investment community includes mainstream financial analysts, socially responsible investment (SRI) analysts, and corporate governance analysts.

These analysts are located globally and assess whether BHP Billiton’s performance closely aligns with shareholder interests, including delivering good financial returns and demonstrating strong group performance and governance.

Increasingly, non- financial performance is also of interest; elements of this include improved governance mechanisms and non-financial risks and their mitigation.

• regular communications to mainstream investment organisations, SRI analysts and corporate governance analysts;

• analyst briefings on key issues (subject to applicable laws), including briefings for SRI and mainstream analysts with a particular interest in environmental and social performance, and dialogue on key sustainability issues with a range of stakeholders, including the SRI and mainstream investment community;

• printed reports (Annual Report, Sustainability Report);

• participation in external bench-marking initiatives.

Shareholders are a diverse group, with significant

The creation of long-term shareholder value through a combination of

• Annual General Meetings;

• regular printed and electronic communications;

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Stakeholder Interest Engagement methods

representation in Australasia, Europe, South Africa and North America.

consistent financial returns and high-quality governance; continuous improvement and the understanding of shareholders’ concerns.

• regular meetings with institutional shareholders and investor

representatives;

• access to all investment community presentations via website

www.bhpbilliton com

Customers are generally other large organisations.

Typically focused on reliability and supply; product quality, cost and delivery; the full life-cycle impacts of products and the downstream products made using BHP Billiton materials; materials and resource efficiency and the management of final waste materials.

• regular communications with BHP Billiton marketing;

• technical support to assist with product use, either in terms of process efficiency or product handling;

• product information, including material safety data sheets;

• visits to operations;

• technology exchanges with operations;

• participation in a range of stewardship initiatives, such as the Responsible Jewellery Council and the World Nuclear Association Uranium Stewardship Working Group.

Media includes representatives from print, online and broadcast media.

A broad range of issues reflecting all stakeholder interests.

media releases, briefings, presentations and interviews. Business partners include those organisations with joint venture arrangements.

Interested in ensuring that suitable governance mechanisms are in place, financial returns are delivered and that risks are sufficiently mitigated.

• via joint venture boards and operating committees;

• printed reports (Annual Report, Sustainability Report);

• joint venture partner participation in Health, Safety, Environment and Community (HSEC) audit programs.

Employees and contractors

located in more than 25 countries.

Matters concerning the health and safety of the employees and colleagues, working conditions and career development opportunities. For

employees and contractors who reside near the operations, it is common for any prevailing local issues, such as

employment

opportunities, business creation, social

infrastructure, schooling and health care, to be shared with local communities. In many remote communities,

• regular performance reviews and employee perception surveys;

• direct communication with employees through immediate supervisors and management;

• operation-based newsletters and general communications;

• BHP Billiton intranet;

• asset and operation-based sustainability reports;

• Business Conduct Advisory Service;

• participation in HSEC performance improvement initiatives at their own operations.

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Stakeholder Interest Engagement methods

housing, basic services and amenities are key to employee attraction and retention.

Local and Indigenous communities

Potential environmental and social impacts associated with company’s operations. A focus is to ensure opportunities are optimised (e.g. maintaining sustainable community development opportunities after a mine closure). Results from stakeholder perception surveys, regularly conducted by operations, rate local employment and business creation, support for social infrastructure and programs, a desire for improved community engagement mechanisms and improved environmental performance as local communities’ most important interests and concerns.

• community consultation and engagement groups;

• participation in BHP Billiton activities;

• newsletters and targeted communications;

• community perception surveys;

• support through local foundations (e.g. in Chile, Peru, Colombia and

Mozambique);

• other operation-specific engage-ments developed as part of operation

community relations plans.

Industry associations include commodity- specific associations, as well as sector- specific associations, at national and international levels.

A diverse range of issues relating to the sector or commodity, such as environmental legislation, safety standards and promotion of leading practice

• BHP Billiton engages with this group through ongoing representation on specific committees and engagement during specific projects with industry associations, both nationally and internationally, such as the Minerals Council of Australia and the

International Council on Mining and Metals. Suppliers include local businesses as well as large international suppliers. Supply agreements, payment processes and required supplier standards.

• in addition to a review of zero-tolerance requirements across suppliers, BHP Billiton performs a supplier

segmentation based on HSEC and business conduct requirements. Based on this segmentation, they define the appropriate engagement throughout the supplier life cycle.

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Stakeholder Interest Engagement methods

regulators at local, regional, national and international levels.

legislative and regulatory policy frameworks for the natural resources sector through the full project life cycle. They are also interested in market access, product stewardship, environmental

performance, social policy and fiscal regimes

applicable to the resources sector.

events, such as political party

conventions, for the purpose of better understanding the implications of public policy development on business

operations;

• employees may participate in political processes as individuals, provided it is made clear that in doing so they are not representing BHP Billiton;

• BHP Billiton will express its views to governments on subjects that affect the group’s interests and operations. This must be done in a manner that adheres to high standards of ethics and complies with the letter and spirit of the law;

• BHP Billiton will not make political contributions in cash or in-kind anywhere in the world and will not participate directly in the activities of political parties.

Non-government organisations

include environmental, social and human rights

organisations at local, national and international levels.

Ethical, social and environmental performance of existing operations, proposed operations or closed operations. These stakeholders are increasingly interested in non-financial performance, such as better governance mechanisms and non- financial risks and mitigation.

• each operation identifies relevant local non-government organisations (NGOs) and includes mechanisms for

engagement with them within the asset’s community engagement plan; • at the corporate level, BHP Billiton

regularly engage with relevant national and international organisations. The Forum on Corporate Responsibility (FCR) includes leaders from a number of NGOs, including WWF Australia, Oxfam Australia, Alliance for Responsible Mining (Colombia), International Alert (UK) and Centre for Social Markets (India). The FCR meets twice a year and is chaired by the company’s CEO.

Labour unions The types of issues that are raised by unions include workers’ rights and interests, collective bargaining opportunities, health and safety matters, remuneration, working hours and roster arrangements.

• direct communication with unions as required. BHP Billiton respects the rights of all employees to freely choose to join labour unions and has a mix of collective and individual work arrangements at the operations.

Prospective employees are made aware of employment arrangements prior to joining the group.

Source: 2011 BHP Billiton’s Sustainability Report, p. 3.

Despite this explanation of its stakeholder engagement model, the “stakeholder web relationships” are not explicitly stated in the corporate objective for the period 2009-

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2011. In the 2006-2008 reports, the Company stated its corporate objective in a “neutral” or general fashion followed by the statement of responsibilities to stakeholders in the Sustainable Development Policy section, as quoted below:

BHP Billiton’s corporate objective is to create long term value through the discovery, development and conversion of natural resources and the provision of innovative customer focused solutions. (2006 Sustainability Report, p. 189; 2007 Sustainability Report, p. 36; 2008 Annual Report, p. 125)

While we strive to deliver strong financial returns to shareholders, we fully recognise and deliver on our wider responsibilities to our stakeholders: as the Policy states ' our objective is to be the Company of choice – creating sustainable value for our shareholders, employees, contractors, suppliers, customers, business partners and host communities.' (2006 Sustainability Report, p. 199; 2007 Sustainability Report, p. 112; 2008 Sustainability report, p. 46)

The “quite clear” statements of the stakeholders’ objective in 2006-2008 reports are totally different from those in the 2009-2011 reports. In the latter period, the Company explicitly stated their objective toward their shareholders as follows:

Our corporate objective is to create long-term value for shareholders through the discovery, development and conversion of natural resources, and the provision of innovative customer and market-focused solutions. (2009 Annual Report, p. 5; 2010 Sustainability Report, p. 4 with slightly different words; 2011 Annual Report, p. 5 with slightly different words)

The responsibilities to other stakeholders were still outlined in the 2009-2011 reports, even though they are not explicitly mentioned in the corporate objective. Based on the substance of the report presentations, it is argued that the Company did not move away from the stakeholder notion, but the exclusion of other stakeholders in its corporate objective remains questionable.

The relationships maintained with stakeholders were also reflected in the Company’s vision and mission, which are in line with the ethics of care principles. The vision also took into account the ethical perspective that leads to sustainable development, as outlined in the following quotes:

BHP Billiton’s corporate objective is to create long term value through the discovery, development and conversion of natural resources and the provision of innovative customer focused solutions. In pursuing this objective we have committed to the highest level of governance and strive to foster a culture that values and rewards exemplary ethical standards, personal and corporate integrity and respect for others. We consider this fundamental to our commitment to sustainable development. We also believe that

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there is a link between high-quality governance and the creation of value. (2006 Sustainability Report, p. 189)

For BHP Billiton, sustainable development is about ensuring our business remains viable and contributes lasting benefits to society through the consideration of social, environmental, ethical and economic aspects in all that we do. Working through complex operational issues associated with our operations has highlighted environmental and social performance as a critical success factor for the Company. We are well aware of the costs of getting it wrong; but, more importantly, we recognise the value that can be created by getting it right. Consequently, we adopt a holistic approach to business strategy, seeking to realise value for our stakeholders through a sustainable business philosophy … Line managers have ultimate accountability for ensuring our businesses contribute to sustainable development. (2011 Sustainability Report, p. 45)

Three groups of stakeholders are substantially represented in the annual and sustainability reports. They are the shareholders, employees and the environment and community.

BHP Billiton’s responsibilities to its shareholders, investors and the financial community generally are explicitly and completely explained in both the annual reports and sustainable reports 2006-2011. The responsibilities include, but are not limited to, ensuring the right to vote on important matters; providing return in dividends and capital returns; creating long-term shareholder value by implementing strategies of investment in large, high-quality assets that deliver growth and superior margins throughout the economic cycle; and maintaining the highest standards of disclosure. The responsibilities to the shareholders represent BHP Billiton’s commitment to the creation of long-term value not only related to dividend distribution but also to the good governance practices.

For employees, the Company also clearly stated its responsibilities in both annual and sustainability reports. These responsibilities include developing the employees’ skills and capabilities through regular performance reviews combined with adequate training and development programs; providing local employment with recruitment standards; facilitating opportunities for employees to assist others through arrangements such as the Matched Giving Program; developing and maintaining a diverse workforce and provide a work environment in which every employee is treated fairly and with respect. BHP Billiton also prohibits the use of child labour and forced labour at the Company’s operations. In the 2009 Sustainability Supplementary Report, it is stated that children

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must not be hired before completing their compulsory education. The minimum age for entry into employment must be 15 years old. Employee attraction and retention are recognised as fundamental to the Company’s success and are addressed through effective development and training programs, attractive remuneration packages, work- life balance initiatives and providing a fair and non-discriminatory work environment. The conducive work environment results in low turnover rates (11.08% on average), as illustrated in Table 5.2, which shows employees’ satisfaction with working conditions.

Table 5.2 Employee turnover rate 2006-2011

2006 2007 2008 2009 2010 2011

7.3% 12% 14% 15.5% 8.9% 8.8%

Source: BHP Billiton’s Sustainability Report for the year 2006-2011.

The Company’s approaches to the environment and community stakeholder group manifest through various channels and efforts. These include biodiversity protection, voluntary community programs, collaboration with governments, NGOs and academic institutions worldwide to undertake and support research on improving sustainability performance, emissions management, recognition of indigenous people’s culture, heritage and traditional rights, and acknowledgement of the risks of climate change and the need for accelerated action to stabilise greenhouse gas concentrations at acceptable levels.

BHP Billiton once stated that it adopts a rights-based approach that is implemented by the people, rather than for the people, and requires significant skills and resources. This approach places much of the decision making in the hands of individuals or groups within the community. From the ethics of care perspective, the rights-based approach also means caring for people, as BHP Billiton seeks to empower people by implementing participatory and sustainable community development. One of the outcomes of these community approaches is a decrease in community complaints, as illustrated in Table 5.3. BHP Billiton has also committed to preserving the environment and, since 2008, has focused on integrating environmental responsibility directly into each activity in its operations.

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Table 5.3 The number of community complaints and environmental spending

2006 2007 2008 2009 2010 2011

Community complaints (noise-related

issues are the most common) 603 543 536 377 232 194

Environmental spending, including R&D costs, site rehabilitation, environmental monitoring, and other expenditure such as environmental impact assessment and training (US$ million)

309 288

These expenditures are no longer reported as the Company’s focus on integrating environmental responsibility into all activities means that it is not possible to accurately extract expenditure on the environment.

Source: BHP Billiton’s Sustainability Report for the year 2006-2011.

In line with its multi-national operations in several countries, BHP Billiton claims to benefit to local environments and communities through contributions, as implicit in the statements below:

When BHP Billiton Petroleum began a major expansion of its Zamzama gas plant in Pakistan to accelerate commercialisation of unallocated reserves, it faced the challenge of having a workforce with limited or no experience of construction sites or of effective occupational health and safety processes. At the end of the two-and-a-half-year project, besides achieving outstanding safety results, BHP Billiton was successful in transferring safe work processes to its contractor and the contractor’s workforce. (2009 Sustainability Supplementary Report, p. 32)

In Zululand, South Africa, BHP Billiton Aluminium, in partnership with The Wildlands Conservation Trust, funded the establishment of the Indigenous Trees for Life Program to create livelihoods for disadvantaged community members, while also establishing lasting environmental benefits. The program contracts unemployed members of the Mzimela community to plant and care for seedlings in the local forest and to sell a portion of seedlings to generate income. Participants – named ‘Tree-preneurs’ – are trained in indigenous tree propagation, mentored and given starter packs and a market through which to sell a portion of the trees they propagate. (2011 Sustainability Report, p. 23)

The notion of corporations as webs of relationships is supported by the Company’s organisational structure and commitment to maintain relationships. The BHP Billiton governance structure is depicted in Figure 5.1. As illustrated, there are four committees that play significant and important roles in maintaining relationships with stakeholders. These are the Risk and Audit Committee (RAC), Sustainability Committee, Nomination Committee and Remuneration Committee.

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Figure 5.1 BHP Billiton governance structure

BOARD

(Board Governance Document)

Source: BHP Billiton’s 2011 Annual Report, p. 110.

The RAC assists the Board in monitoring the decisions and actions of the CEO and the

In document Financial Management, Corporate Governance and Risk Management: A Feminist Perspective Using an Optimisation Approach (Page 108-130)