Measuring and Evaluating Sustainability Ethics Indexes

Question: Discuss about the Measuring and Evaluating Sustainability for Ethics Indexes. Answer: Introduction Sustainability ensures that the requirement of the present are met without affecting the future generations ability to meet their requirements. Thus, a balance is required to be maintained between the past and future by considering the social, environmental and economic resources. According to Bell and Morse, 2008, the definition of sustainability and the ways it can be measured is being continuously argued (Bell and Morse, 2008). According to the UNEP, 2011, there is an ongoing discussion on Green Economy by the UN which states that a green economy leads to a better social life by decreasing the risk of environment (UNEP, 2011). According to SAFA, 2012, maintaining the overall sustainability requires proper governing body to address the economic, social and environment factors (SAFA, 2012). Considering this factor, a number of indicators and measurements have been created to achieve the desired results. According to Bell and Morse, 2008, if the business is only looking after the profits by reducing its costs and not considering the environment, social and economic impact then the sustainability is weak (Bell and Morse, 2008). BHP Billiton: Company Profile BHP Billiton is the worlds largest mining company in terms of market values and is into the business of mining, metals and petroleum. The company is headquartered at Melbourne, Australia. It is one of the largest producers of the commodities which includes iron ore, copper, metallurgical coal and uranium. The company is also into the production of oil, gas and energy coal. The main operations of extraction are being carried out in Australia and America. The company has a huge network of its supply across the world with Singapore, America and Houston as the major ones. The company is listed as BHP Billiton Ltd and BHP Billiton Plc and run its operations under dual listed company structure as a combined group called BHP Billiton. The company has employed over sixty five thousand employees and contractors. The company ensures the health and safety of its employees to create a healthy environment culture. The company strongly believes in creating meaningful contributions to the society a nd building a long term relationship with them through its sustainability model approach. The company has a long term strategy to run its large operations which are flexible and are diversified by the commodity, markets and geography. Its tactfully designed strategy has helped to build a sustainable model by delivering great margins throughout for many years. The company has been able to maximize its profits and returns through its diversified and low cost process and has a robust financial performance track record for many years which has delivered long term value to the shareholders. The company has a highly skilled workforce which has helped to deliver high performance. The firms employees are committed towards their work and reflect the values of the organization. They work very hard to achieve the desired results and have s strong commitment to the company. Sustainability Dimensions Sustainability is vital for any corporation and supports to integrate the environmental, social and economic factors into the decision making process. It ensures the health and safety of the suppliers, contractors and people residing in the local area. It ensures that the use of natural resources does not have any adverse impact on the environment. It creates long term relationships with the community. Socio-cultural sustainability is must for a business to run its operations successfully. It ensures that the corporation makes products that would build better lives for the people. It understand that it has corporate social responsibility and works towards the welfare of the community. It sources the materials responsibly for its business operations. BHP Billiton produces major commodities such as iron ore, metallurgical coal, uranium and copper and has also business in conventional and unconventional oil and gas and energy coal (BHP Billiton Annual Report, 2015). It responsibly sources its material from the Olympic Dam in Australia (BHP Billiton, 2016). The corporation fully understands its corporate social responsibility and strongly contributes towards the societal welfare by aliasing with the government, communities and other partners for the social and economic development. Environment sustainability ensures that the firms make use of the available resources very tactfully. The firm has to abide by the laws and regulations of the country. It has to run its business operations safely, efficiently and responsibly. Also the business practices ensure that in case there is any undesirable impact of the product on the external environment then it tries to control or minimize it. BHP Billiton is highly committed towards ensuring environmental management and understands the demonstration of environmental responsibility. It tries to minimize its requirement for environmental management by minimizing the impact within their local region. Economic sustainability provides a firms profitability. The firm has to strategically manage the customer cost as well as consumer cost so that the product is being used by them. The company has to make sure that the products it makes are being demanded by the customer. It has to understand that purchasing local goods and services would add to the economy of the country. It must pay taxes to support the community. BHP Billiton has been able to maximize its profits through strategically managing its operational costs and product costs. BHP Billiton has built an environmental management system which has been certified by the Australian government Standard AS/NZS ISO 14001. BHPs Health, Safety, Environment and Community Management Standards prescribe the roles and responsibilities of the company to abide by the environmental laws of the country. PESTEL Analysis Political Factors Political factors involve terrorism, civil unrest, introduction of government acts and policies, nationalization, lease permits (BHP Sustainability Report, 2015). Economic Factors Inflation could lead to an increase in labor costs, energy costs, operations costs, exploration expenses and cost of material. Fluctuation in currency would again impact the company economically (BHP Sustainability Report, 2015). Social Factors Social factors include developing the infrastructure for schools, houses and roads which adds to the company cost (BHP Sustainability Report, 2015). Technological Factors BHP Billiton depends on technology to run its operations such as exploring and discovering mines which is a further expense for the company. Environmental Factors BHP Billiton is a natural resources company and is adversely affected by the environmental laws, regulations and public policies. The company always faces the fear of losing its operating license and has to mandatorily abide by the environmental laws of the country (BHP Sustainability Report, 2015). Legal Factors The law suits impact the future decisions and operations of the company. Assessment of Monitoring Indicators The report has discussed all the three sustainability dimension which are social, economic and environment. One of these dimensions would be analyzed and assessed to construct the indicators that can be monitored. Environment sustainability is most crucial dimension in this case because the firms core business is to exploit the natural resources on the earth. Thus, the firm has to make sure that it fully stands responsible for controlling the impact of its business operations on the environment. The report would analyze this dimension in detail by discussing firms contributions towards environment. Environment Sustainability BHP Billiton is into the business of producing mines and coals which requires exploring the natural resources. BHP Billiton has a great responsibility towards minimizing its impact on environment to save the land, biodiversity, water and air from the adverse effects. The report shall discuss the key indicators for the sustainability of the environment in Australia. The process of extraction of coals and mines leads to the emission of green house gases in the environment which is a very adverse phenomenon. Extraction of coals and mines is done from the natural resources which make the land infertile by extracting all the minerals and useful ingredients. The land cannot be used for vegetation because of its infertility. The production process of coal and mine liberates harmful and toxic waste materials of mined rocks which requires proper disposal and cannot be just thrown out on the land or disposed in the river because it would threaten the marine life. Thus, the huge waste disposal is a big challenge. Mining process adversely affects the surrounding environment and land by the liberation of chemicals and toxic waste. It pollutes the land and makes the nearby land inhabitant for the people. Coal production liberates heavy amount of carbon in the air which pollutes the air and can have very disastrous effects in the near future. The process of production makes use of water, which is already available in scarce quantity. The production requires water in good quality and quantity for its use. With the rising population in the world water needs to be conserved and usage of water for mining would create a scarcity of water by exploiting its resources. The production of oil and gas pollutes the groundwater resources through its drilling and hydraulic fracturing process. The process makes use of toxic chemical which could have an adverse impact on the quality of the groundwater and the exploitation of groundwater well could affect the other groundwater wells. In order to do so the corporation has taken steps to address the issue by identifying the opportunities that provides service to the environmental resilience. It has taken following steps to proceed further in the activity: Sustainability Measures There are various methods to measure the indicators of sustainability direct, representative and performance measures. The easiest way to measure the sustainability indicator is to measure it directly. The land that has been impacted by the extraction of ores and mineral can directly measured through ground survey or satellite imagery. It can be measured through comparing with the historical trend and evaluate whether its fertility is increasing or decreasing. Representative indicators would help to measure a larger impact on the system and can used to determine the impact on the marine life living in water through a count of water inhabitant and whether it has increased or decreased over the period of time. Performance indicators are used to determine to impact of companys operations on the environment. It would help to determine the level of greenhouse gas emission in the air by a comparison study of the level of greenhouse gas. Biodiversity Management The survival of ecosystem is dependent on the biodiversity for food, air and water. There is an increased competition for the natural resources and land is the most useful one. Thus, it fosters the use of land as a resource more effectively. There is a risk involved in the usage of land as a resource which ensures that the company manages the impact fully so as to maintain its operating license. The corporation also understands it environmental obligations to minimize the environmental impact. It has great role to play in protecting the environment through its commitment towards the obligations. The action for the same is being laid out in the companys environment GLD. The company must abide by to not to extract its resources which lie within the periphery of the global heritage. They cannot extract resources which lie adjoining the global heritage. They cannot explore the resources within the periphery of the International Union for Conservation of Nature. In order to do so they must prepare a plan this fulfils the regulatory needs and considers the need of the stakeholders along with giving value addition to the area protected by law. They cannot function over an area where there is a risk of diminishing a wild species which is covered under the list of IUCN Red List. They cannot transfer the waste material into the river or another marine environment. BHP Billiton understands that it has to ensure managed use of water and its resources. Global Reporting Initiative Economic Performance BHP Billiton has generated value through its revenue generation, employee compensation, donating activities and community investment. It has contributed to the socio-economic lives of the people through its community activities. Further, it has maintained its minimum wage for the entry level workers. It thrives for a continuous improvement system in order to improve its operational business and manage the product cost (BHP Billiton Annual Report, 2015). It obtains its material from the Olympic Dam of Australia (BHP Billiton, 2016). It regularly pays the taxes and supports the community (BHP Billiton Annual Report, 2015). Environmental Water Management The firm has made a contribution of $35 million to the programs of environment. Its 85% of the water comes from low quality water resources. It has taken following measures to sustain this resource: Tries to minimize the use of water by increasing the efficiency of usage Makes use of those sources which provides low quality water Looks for alternative options for water supply Managing and monitoring the impact on the environment Taking initiatives towards community welfare Biodiversity Management It also makes efforts to minimize greenhouse gas emissions which could have adverse impact on the biodiversity and ecosystems. It addresses the issue with its compensatory actions so as to minimize the impact (BHP Billiton Annual Report, 2015). The corporation maintains the biodiversity of the regions in which it operates by appreciating the need of conserving them. The firm has developed plans for the management of biodiversity which would include controlling and minimizing the impact before the compensatory actions with the support of Environment GLD. Social Employment BHP has maintained its gender ratio and 15 percent of the employees are female in Australia. The ratio of male and female is dollar 1.1 in Australia. Labor and Management Relations BHP gives a notice period of one to eight weeks as per the role of employee. Further it emphasizes on fostering safe and engaging workplace by maintaining the diversity. It also has a reward system in the company (BHP Billiton Annual Report, 2015).. Health and Safety Further it has implemented policies concerning the health and safety of the employees. The figure for Occupational illness per million hours worked employees is 5.5 in Australia (BHP Billiton Annual Report, 2015).. Training and education BHP has created programs to train its employees and give them an opportunity to evolve as a leader. 84 percent of its employees were involved in the process of management (BHP Billiton Annual Report, 2015). Assessing the Dunphy Phase of BHP Billiton Now assessing the Dunphy phase of BHP Billiton would help to evaluate the sustainability level of the company. The company is at the 4th stage of Dunphy which is Efficiency. The stage reflects that the company is growing in terms of its corporate social responsibility and making attempts to develop an integrated HR system and increase its efficiency. BHP Billiton has carefully calculated the cost of utilizing natural resources and making a positive effort towards a sustainable environment though elimination of waste, minimizing the use of resources. But the firm is still avoiding the environmental issues when it comes to avoiding company costs which brings it under the 4th phase of Dunphy. Thus, the firm must build proactive strategies and redesign its product and processes to ensure environment sustainability. BHP Billiton would have to redesign its products so as to minimize the use of water and use low quality of water so as to conserve water for the future generation. BHP Billiton must redesign its processes so as dispose less waste material and the marine life is not harmed and the number of inhabitants are not reduced. BHP Billiton should contribute towards the welfare of the environment so as to compensate its effect which its processes have created on the environment. Monitoring the Plan Once the above steps are taken, then it must monitor them regularly through internal audit process and measuring the indicators whether there has been any improvement. Indicator Measurement Limitations Bio diversity Infertility through loss of minerals Since extraction of minerals and ores is the core business of the firm, therefore it cannot be minimized Water and marine life Disposing toxic waste material in river Since toxic waste material would be generated from the mine rocks, which requires proper disposal. Since the waste cannot be disposed on land because it would affect the inhabitants in the local area, therefore, water is the only mode of disposing the material. Ground well Toxic chemical Production of petroleum and gas would require drilling in the wells which cannot be controlled. Air Emission of greenhouse gas and carbon in the air The process of mining involves emission of greenhouse which cannot be controlled or compensated just by paying taxes for emission. Conclusion Thus, the report has reviewed all the sustainability indicators which are social, economic and environment. Environment is an important indicator for the firm because of its core business operations. The key indicators are bio diversity, water, air and ground well for the environment sustainability. The firm is categorized as Efficient in the Dunphy phase because it still has a scope to transfer towards the phase of strategic sustainability. List of References Bell, S., Morse, S. (2008). Sustainability Indicators:Measuring the Immeasurable?. London: Earthscan. Bell, S., Morse, S. (2012). Sustainability Indicators:Measuring the Immeasurable?. London: Routledge. Bell, S., Morse, S. (2013). Measuring Sustainability:Learning From Doing. London: Routledge. BHP Billiton. (2008). Environmental Management and Commitments. BHP Billiton. Retrieved from: https://www.bhpbilliton.com/-/media/bhp/regulatory-information-media/iron-ore/western-australia-iron-ore/0000/main-document/persection12environmentalmanagement.pdf BHP Sustainability Report. (2015). Taking the long view Sustainability Report. 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