Monitoring systems and development of indicators

This report aims to analyse the sustainability levels of the selected organization named BHP Billiton. The company indulges in mining, petroleum, and metals. In this report, it explains the monitoring systems and indicators to improve the overall operations of the business. Moreover, it depicts the different sustainability dimensions of the company. On the basis of these dimensions, company can overcome the sustainability issues in the long term. Lastly, in this report, it explains the list of indicators and business transformation plan through Dunphy phase model.  

A monitoring system helps the business to measure its sustainability in the context of 3p’s i.e. people planet and process. The monitoring system is important in the company to evaluate and assess the every process related to its activities. This process helps the company to diagnose the problems that influence the sustainability operations of the business. The good monitoring system enables the business to take viable decisions that reduce the risk in the business in context of its people process and planet. BHP Billiton effectively monitors triple bottom line of the sustainability indicators and effectively manages the operations of the business (Dawson, 2016). The key characteristics of the effective monitoring system are located below in the table that helps to take strategic decisions in the business and also improve the process and performance of the business.

• The effective monitoring systems measures the reports and outputs that reflect the depicts the critical goals and objectives of the company
• It gives the clear indicators regarding the performance of the organization and the information and sources used in the company are measurable and verifiable.
• A good monitoring system identifies the key issues and major cause of the problems
• It is also cost effective for the operations of the company (Dunphy and Benn, 2013).
• The good monitoring plan includes internal audits at regular basis with high transparency that reduces the fraud practices in the company.
• It observes deeply the employees behavior at every functional level and asks questions and suggestions to improve current processes.
• The good monitoring system provides the effective results.
• The monitoring plan is updated and monitored regularly.
• It manages the resources strategically according to the need and requirements of the business.
• It also checks the capacity of the business to carry out the basic activities.
• It checks the feasibility of the activities and ensures that the proposed activities are realistic for the business (Hák, et al., 2012).

 These above key characteristics help to develop the key indicators to take effective decisions in the company. The characteristics of the good indicator are to point out the relevant issue or problem and tell the company about the directions of the business needs to go to address the issues. The effective indicators are relevant and indicate the important areas needs to know. Moreover, the role of effective monitoring systems helps the company to measure the progress towards goals and objectives. The Below given figure depicts that the contribution of monitoring systems helps in the development of indicators (Perrott, 2014). An indicator is something that gives an idea to the company about the overall directions of the business. It indicates the present scenario of the company, it tells that which direction the company’s business is going and how far it is from the overall objectives and goals. A good indicator tells the actual problem before it gets too worse. With the help of effective monitoring system the company’s indicators, alert management to recognize what needs to be done to fix the problem. Sustainability indicators are different from the traditional indicators of economic, social and environmental progress.

Figure 1: Source: (Huang, 2014)

 In the below-given figure, it depicts that the sustainability indicators are interconnected with the traditional indicators like economic, social, and environmental progress. Traditional indicators of the company are stockholder profits, asthma rates, and water quality. The changes in one part of the community are interconnected with the other parts. In the above-given figure, it is indicated that the profit of the stockholder is depends upon the production of the materials (Benn, et al., 2014). It is related to the economic indicator. The production level increases the jobs and profit of the shareholders are also increased. Moreover, increase and decrease n job level influence the poverty rate and crime rate. Poverty and crime rate are the social indicator which is influenced by the sustainability issues. Fresh air quality and clean water increases the shareholder’s profits and improves the health condition of the workers. The poor quality water increases the expenses of insurance and decreases the productivity of the workers in the company that also reduces the profits of the shareholders of the company. Sustainability requires this type of multidimensional indicators that shows the links among a community’s economy, environment, and society (Hurwitz, et al., 2016). 

Description of Selected Company

BHP Billiton multinational company engaged in mining, metals, and Petroleum. It is the largest metals and mining company based in Melbourne, Australia. The company’s segments include petroleum, copper, Iron Ore and coal. The petroleum segment is engaged in exploration, development, and production of oil and gas. The company is formed with the merger of the Australian Broken Hill Proprietary Company Limited (BHP) and the Anglo-Dutch Billiton plc. It is also listed under Australian stock exchange and it is one of the largest companies in the Australian in terms of market capitalization. The main purpose of the company is to increase the long-term shareholder value through the discovery, acquisition, development and marketing of natural resources. The values of the company towards sustainability is to focus on health and safety first and being environmentally responsible and supporting the communities. The company’s sustainability framework includes risk management and sustainable development, guides company’s investments in host countries and local communities as well as company’s operating assets. The company focuses on the environmental, social and cultural development (Jones, et al., 2016). Moreover, the company follows the sustainability governance compliance standards and policies. The company’s activities are highly regulated by laws and regulations related to the safety, health, environment and community impacts. The company follows the high governance standards as per the areas of operations in different countries. Moreover, the company has also the committee named HSEC which involves in the matters related to the health, safety, environment and community. The company deals in various sectors i.e. mining, petroleum, processing and oil and gas production operations in over 25 countries. It has five operational units and there are 41000 people are employing in different sectors. Moreover, the company also sets the sustainability development goals to improve the wellbeing of present and future generations. Below given figure represents the sustainability development goals

Figure 2: Source: (Moldan, et al., 2012)

Above figure indicated the proposed sustainable development goals of the company contributes in the areas of the different fields.

BHP Billiton believes that sustainability has three dimensions i.e. social, environmental and economic. The management takes a decision on the basis of three dimensions to achieve the following outcomes.

The Three dimensions are listed below which completely identify and define the sustainability problem. Most of the company’s focus only on single dimension more i.e. environmental dimension. But other two pillars are also important for sustainable development of the company (Naticchia, et al, 2013). BHP Billiton believes that the balance between three pillars is the key for sustainable development. It is explained as follows.

• Support the communities in which they live and work. The company maintains the quality work environments to reduce the level of risks for their communities and employees
• Aspiring towards Zero Harm to people and the communities
• The company identifies the need of the socially responsible and contributes to sustainable community development.
• Source materials responsibly(Nelson, et al., 2012).
• Effective policies for mine life cycle
• Human rights
• Community Development

• The company uses the resources wisely
• The company complies with the laws and regulations. Activities from exploration to extraction of minerals all are followed by the company’s standards and policies.
• Reduces the impact of the products that is used by the consumers.
• Climate change and water management (Naticchia, et al., 2013)

• Companies maintains their profits
• Supply chain management
• Transparency and Accountability (Moscardo, 2013)
• External performance indicators
• Sector specific global initiatives

Above given points indicated the relevant dimensions of the company which is consider by the BHP Billiton to achieve the sustainability goals. Apart from that, there are some challenges faces by the company in these three areas.

In the social sphere, the company faces the challenges like worker and community safety, stakeholder engagement, HIV/AIDS reduction, policies for the lifecycle of the mining operations and human rights (Palm and Matthews, 2015). To overcome these challenges company effectively plans the occupational safety training and health insurance policies. Moreover, in the areas of operations of African mining units, the worker’s productivity is low due to HIV/AIDS and other fatal disease which also decrease the workforce. The company also takes the initiatives to reduce these problems and provide medical facilities and safety precautions during employment.

Sustainability Dimensions

The environmental impacts negatively on the profits of the shareholders due to the extraction of resources from the earth that influenced the water, climate, and energy level of nature, the stakeholders are much concern about the usage of water and energy use by the company during biodiversity. The emissions rise from the extractions of the coal and petroleum derivatives is the major concern for the firm to increase the level of global warming. Climate disturbances reduce the energy efficiency levels.BHP Billiton continues to reduce the emissions of toxic substances like carbon, nitrogen and sulfur dioxides generated in the melting and combustion processes. Moreover, with the help of innovative techniques the company measures the air quality in mines and it must monitor and maintained at safe levels.

The economic impacts like the company cannot operate in a way that will provide the long-term sustainability. To maintain economic sustainability, various factors can company taken into the account like debts, sales, payments and other factors. The interest of the investments in the public sector and payments made to the governments (Starik Stubbs, and Benn, 2016).

As per the above dimensions the company needs to focus on the environmental dimensions more rather than these two dimensions to reach the level of sustainability in future. The sustainability indicators monitor the sustainability dimensions thoroughly to identify the issues. Below given table represents the different types of indicators which monitor the environmental dimension of the company. Moreover, it also explains the challenges, reporting, and measures to achieve the sustainability level.

Above given table indicated the various indicators to monitors the environmental dimensions of the sustainability issues. An indicator indicates the different elements of the environment which can be a challenge for the company to accomplish the sustainability goals of the company. It can be identified from the above table there are five major challenges for the company to reduce the sustainability goals. The issues related to atmosphere consist of climate change, Ozone layer depletion and Air quality which directly impacts the health of the people, biodiversity and ecosystems.These effects are in long term in nature and affect the future generations (Stowe, et al., 2016). Three indicators related to the atmosphere. The first indicator measures the net emissions of greenhouse gases which influenced the climate change and that can be measured by the special protocols. The second indicator measures the ozone depleting substances and it can be measured by the Montreal Protocols of the government. The third indicator measures the pollution increase in urban areas.

Use of land in an unsustainable manner impacts the minerals, soil, water and communities, atmosphere and marine ecosystems. It is the precious resource for the company for the future exploration and extraction of materials and minerals. The magnitude of land use influences the ecosystems like an increase in the global warming and disruption of the nitrogen cycle. The indicators indicate that the pressure on land use threats the overall business of the company and it also impacts on the production and consumption of the resources if it is not used properly and sustainable manner. The company needs to joint venture with the various institutions which will work for the Land degradation and deforestation (USDA, 2016). There are certain areas for future work related to integrated land management. The company needs to work in the following areas:

• Prevention and mitigation of land degradation
• Access to land and security of tenure
• Involves stakeholder participation towards the conservation of land
• Rehabilitation of land degraded by mining

These indicators and initiatives help the company to monitor the environmental dimensions of the company that will surely help to achieve the sustainability levels in the company (Forbes, 2016).

Dunphy phase indicates the overall picture of an organization in context to the society. There are basically five stages of Dunphy phase which can sustain the company for the long term period.

• Rejection
• Non-Responsiveness
• Compliance
• Efficiency
• Strategic sustainability
• Ideological sustainability

As per the above phases, the current phase of the company sustains its business at level A in terms of Dunphy phase model. The reason behind this level might be the GRI of the company indicates the underperforming in different products and services which lead to the negative impacts on the revenue and productivity of the firm (Patrickroose, 2017). This underperformance of the particular segment does not allow to the company to reach the next level i.e. Point B. In some of the areas of the country like Africa mining activities are not generate the good profits that decrease the stakeholder’s profits.

In the second stage of Dunphy model, the company aims to raise the mining and exploration activities in African countries to increase the profits. Moreover, the company needs to make strategic policies to maintain the environmental dimensions of the sustainability. The company should use the advanced technology and techniques to earn the sufficient profits (Durward, Sobek and Art , 2011). Moreover, the company can develop the practices according to the GRI standards to achieve the sustainability goals.

The company should conduct the Corporate Social Responsibility (CSR) and new partnerships that help to sustain the business levels and with the help of modern techniques and methods, the company can accomplish its sustainability challenges. The company needs to focus the key areas of the operations of the company i.e. production process, extraction, and exploration of resources, supply chain management, and waste management. The company can transform from point A to B through improve production process of the different manufacturing units of the business that consumes less energy and resources to increase the capacity of the production (Tseng, et al., 2013). Moreover, the company can also provide the suitable training regarding environmental hazards to employees and tells the significance of sustainability at every stage. The company should monitor the all activities of the company through internal and external audits. The company should monitor the exploration and extraction activities of the minerals and tie up with the various communities which set the specific standards for these mining activities. The company should develop the strict policies and compliances regarding these activities to achieve the level of sustainability in future.   

Conclusion

As per the above report, it concludes that the company effectively manages the sustainability issues to monitors the different areas of issues. Moreover, it also depicts that the sustainability indicators. As per the overall analysis, the current phase of the company is stage four i.e. the efficiency phase. The company can transform their business through effective improvements in the 3p’s i.e. and also report the issues through systematic ways. The business can effectively achieve the sustainable goals through effective monitoring systems.  

References

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