BHP Billiton Brazil Mine Disaster for OECD and GRI- myassignmenthelp

Question: Discuss about theBHP Billiton Brazil Mine Disaster for OECD and GRI. Answer: In the recent decades, there has been an increasing trend for multinational companies to be environmentally friendly. The reasons behind this trend have been due to social demands as well as world environmental sustainability requirements. Through these two players combined, the management of major companies in the world has been left out to decide whether to fill the gap that exists between the corporations disclosure and the publics interest to verify information provided by the company. The trend has led to increased pressure among major companies to adhere to sustainability reports and frameworks such as those developed by OECD and GRI. The problem with these guidelines is that the company's management have been left out to decide what information to report and hence what can be publicly disclosed or not. This has therefore created a room where some companies can conduct inaccurate sustainability reports by selecting on certain parts of environmental performance and leaving out o thers, therefore, concealing the truth. This paper seeks to critically examine the information in the sustainability reports for BHP and Vale and determine if the disclosures in the sustainability reports released were just tools for greenwashing''. The Brazil dam disaster is one of the most known incidences that caused the environmental catastrophe in Samarco Brazil. BHP Billiton together with Vale one of the leading mining companies in the world jointly owned iron ore mine dam that led to the disaster has been accused of having to be aware of the potential threat of the project but took no action before the incident occurred. The companies must have failed to live up to the acceptable levels of due diligence in their responsibilities as outlined in the OECD requirements for multinational companies (Szoke, 2018). A further critical analysis into the scandal has shown that most of the mining companies in the world are surrounded by a lot of controversies which in one way or another contradicts their core values, visions and alleged management strategies outlined in the reports. The reports given by BHP Billitons in the year 2016 and 2017 first shows a picture that the company was working so hard to improve their environmental p erformance ("BHP Billiton Sustainability Report 2016", 2018; "BHP Sustainability Report 2017", 2018). It is however ironical that the statement so hard never gained significance in 2015 when the incident happened. A number of critics of the mine disaster have argued that the two mining companies never executed their roles with any diligence at a little extra effort. Since BHP Billiton and Vale never stated in their sustainability reports that they had perfect environmental performance, I think we can categorize them as two among the greenwashing firms. The Balance Between Security and Transparency Since the incident occurred, it appears to me that the companies have done a little as a way of reacting to the disaster ("How BHP and Vale react next to Brazilian dam failure will be critical", 2018). For BHP, the management moved swiftly by making a site visit to express sympathy for the communities and workers who were affected by the incident ("BHP Billiton | News releases", 2018). The management of Samarco mine just placed a plain announcement in its website giving an outline to the society of their commitment to emergency and transparency issues and that plans were underway ("Samarco announces a change in CEO and reaffirms focus on resuming operations - Samarco", 2018). Vale also gave a small notice on its website to recognize the incident and that they were initiating emergency plans with Samarco to come up with a long lasting remedy ("Statement regarding Samarcos accident", 2018). To me, all these reactions appears plain since the full details that led to the disaster were ne ver stated In contrast with what Samarco, Vale and BHP never mentioned, the Minas Gerais environmental state prosecutor shed more light into the matter. The prosecutor argued that the disaster was not just an accident but a mistake in the operations of the concerned mining companies and negligence for Samarco in their monitoring of the project (Phillips, 2018). The court further provided details of an assessment that was done in 2013 by an independent Brazilian organization- Instituto Pristino which revealed that there was a lot of concerns about the integrity of the project and provided a recommendation that the operating license should not have been renewed a call which was ignored by the relevant authorities ("Brazil | Page 3 of 201 | World news | The Guardian", 2018). All these revelations were never made by the individual companies a fact which shows that they were attempting to strike a balance between the security of their reputations and transparency. Corporate Social Responsibility and Legitimacy Theory There have been increasing concerns about the need for Corporate Social responsibility (CSR) in social accounting and reporting. This need has tremendously permeated into the socioeconomic landscape where a number of legislative and regulatory authorities all over the world have debated about the changes needed to be factored in reporting. The triple bottom line for this has been the necessitation for the mandate of CSR and sustainability reporting among multinational organizations (Maniruzzaman, 2011). Despite the fact that CSR disclosures have been gaining popularity over time, there are a number of criticisms that have come forth as postulated by the legitimacy theory. Given the importance of CSR reporting by the mining companies in Brazil, the equivocal results of the mine disaster show the factors that might have led the management of BHP, Vale and Sarmaco to conceal some facts about the mining scandal. The legitimacy theory has been cited mostly in the area of environmental and social accounting. The theory offers a deeper scepticism into the real insights surrounding the issue of voluntary disclosures by a number of multination corporations (Hummel Schlick, 2016). For the case of BHP, the legitimacy theory addresses a range of issues that arise from the mine disaster in 2015. By looking at a number of opinions from a diverse array of sources and the recent developments surrounding the Brazil dam disaster, there is a lot of knowledge that can be borrowed concerning the management and the ethical legitimacy of the concerned corporations when it comes to accounting issues (Bhattacharyya, 2015). The prepositions offered by the legitimacy theory provides a powerful platform for understanding the surroundings of environmental and voluntary disclosures made by corporations. The understanding further gives a direction for a critical debate into sustainability reports released by BHP afte r the Brazil mine disaster. Legitimacy has been defined as the generalized perception that can be created by outsiders from the actions undertaken by an organization in regard to how they may be proper, desirable or appropriate within a socially constructed system of values, norms, definitions or beliefs. Looking at the case for BHP Billiton legitimacy could have called upon the management of the company to exercise due diligence by playing a critical role in the mine project is one of the investors even beyond their interest in shareholder dividends. It is true to believe that Samarco might have been the sole mine operator in the project but, Vale and BHP being owners should have been responsible for the environmental and social impacts that can be caused by their supply of resources and other business materials required as per the relationship. As the legitimacy theory propounds that corporations need to act in conformity with the society's norms and values in order to continue in existence, BHP and Vale shou ld have ensured that they provide adequate compensation and seek justice to those who were affected by the disaster. Since this has not been done adequately, I think the legitimacy of the concerned corporations has been eroded. Lack of Legitimacy and Loss of Trust The biggest setback for BHP Billiton has been the loss of trust from both the community and the workers ("The harsh cost of BHP Billiton's Brazil crisis", 2018). Since legitimacy is an issue that requires an empathetic and ethical approach that goes beyond risk management and profit making, BHP should have sought at looking for measures that would reflect their concern for both the people surrounding the dam and the environment itself. This shows that the managers for multinational companies in the mining industry are yet to translate what is propounded by legitimacy theory into the daily business activities of the organizations they manage (Nakayachi, 2014). The future of the mining industry is therefore dependent on a shift in the thinking of the leaders to voluntary disclosure of environmental and social information in both the corporations annual report and in the sustainability environmental reports. Conclusion From a detailed evaluation of the BHP Billiton corporate disclosures and sustainability report, it is evident that a lot needs to be done by mining industries in regard to transparency, disclosure and social accounting. As discussed above, it is no doubt that BHP together with Vale and Semarco actually failed to execute their mandates- a fact which led to the occurrence of the mine disaster in 2015. Nevertheless, legitimacy concerns should have compelled the company to investigate into the security of the project through close monitoring, putting in place proper warning systems and listening to independent reports. Moreover, BHP should have also carried out its own assessment of the dam to determine its integrity before giving Semarco a go ahead. Since this was not done, I think BHP has lost its legitimacy and trust among the workers and the community a situation which can only be done through re-assurance of commitment to transparency and mitigation for social and environmental risk s in future. References Bhattacharyya, A. (2015). Corporate Social and Environmental Responsibility in an Emerging Economy: Through the Lens of Legitimacy Theory.Australasian Accounting, Business And Finance Journal,9(2), 79-92. https://dx.doi.org/10.14453/aabfj.v9i2.6 BHP Billiton | News releases. (2018).BHP Billiton. Retrieved 30 April 2018, from https://www.bhp.com/media-and-insights/news-releases BHP Billiton Sustainability Report 2016. (2018).Globalreporting.org. Retrieved 30 April 2018, from https://www.globalreporting.org/Pages/FR-BHPBilliton-2016.aspx BHP Sustainability Report 2017. (2018).Globalreporting.org. Retrieved 30 April 2018, from https://www.globalreporting.org/Pages/FR-BHPBilliton-2017.aspx Brazil | Page 3 of 201 | World news | The Guardian. (2018).the Guardian. Retrieved 30 April 2018, from https://www.theguardian.com/world/brazil?page=3 Hummel, K., Schlick, C. (2016). The relationship between sustainability performance and sustainability disclosure Reconciling voluntary disclosure theory and legitimacy theory.Journal Of Accounting And Public Policy,35(5), 455-476. https://dx.doi.org/10.1016/j.jaccpubpol.2016.06.001 How BHP and Vale react next to Brazilian dam failure will be critical. (2018).The Conversation. Retrieved 30 April 2018, from https://theconversation.com/how-bhp-and-vale-react-next-to-brazilian-dam-failure-will-be-critical-50405 Maniruzzaman, A. (2011). Creeping legitimacy of corporate social responsibility.Amicus Curiae,2011(85). https://dx.doi.org/10.14296/ac.v2011i85.1236 Nakayachi, K. (2014). Examining Public Trust in Risk-Managing Organizations After a Major Disaster.Risk Analysis,35(1), 57-67. https://dx.doi.org/10.1111/risa.12243 Phillips, D. (2018).Brazil dam disaster: firm knew of potential impact months in advance.the Guardian. Retrieved 30 April 2018, from https://www.theguardian.com/world/2018/feb/28/brazil-dam-collapse-samarco-fundao-mining Samarco announces change in CEO and reaffirms focus on resuming operations - Samarco. (2018).Samarco. Retrieved 30 April 2018, from https://www.samarco.com/en/noticia/samarco-anuncia-mudanca-na-presidencia-e-reafirma-foco-na-retomada-das-operacoes/ Statement regarding Samarcos accident. (2018).Vale.com. Retrieved 30 April 2018, from https://www.vale.com/brasil/EN/aboutvale/news/Pages/nota-acidente-samarco.aspx Szoke, H. (2018).Brazil mine disaster exposes BHP's failures.The Sydney Morning Herald. Retrieved 30 April 2018, from https://www.smh.com.au/opinion/brazilian-dam-disaster-shows-bhp-falls-short-of-global-expectations-20151119-gl2i8c.html The harsh cost of BHP Billiton's Brazil crisis. (2018).Financial Review. Retrieved 30 April 2018, from https://www.afr.com/business/mining/the-harsh-cost-of-bhp-billitons-brazil-crisis-20151111-gkwojl