Key Management Processes
Wherever we operate, HSEC aspects are addressed in our decision-making processes, alongside other business considerations. This means that while we strive to deliver strong financial returns to shareholders, we fully recognise and deliver on our wider responsibilities to our stakeholders. Excellence in HSEC management is good business.
We have established a number of key management processes across our Company to ensure there is a common approach to the consideration of HSEC in our business decisions. Further detail on these management processes can be read at:
Business Conduct
The BHP Billiton Guide to Business Conduct is founded on our Charter. The Charter states that the Company cares as much about how results are obtained as it does about delivering good results. How the Company achieves results is important because:
- good behaviour enhances the Company's 'licence to operate' and facilitates the sustainable expansion of our business
- communities value companies who value them
- suppliers value customers who honour commitments
- customers value honesty and integrity
- shareholders value companies that set and live up to high standards
- employees value companies where they trust the integrity of their colleagues and management.
The Guide to Business Conduct applies to all our workforce regardless of their specific job or location. It provides employees and contractors with direction and advice on carrying out business and interacting with governments, communities and business partners. This includes clear guidelines on general workplace behaviour as well as our policies, standards and guidelines on a wide range of ethical issues including conflict of interest, financial inducements and bribery, insider trading and political contributions.
The Guide and its principles are cascaded through the organisation, with managers and supervisors held accountable for not only their actions but also the actions of their staff. This starts at the most senior level of the Company, with the CEO requesting annual confirmation from his direct reports that they and their direct reports have read the Guide and have discussed its contents.
Internal performance requirements regarding business conduct are included in our HSEC Management Standards. Distribution of the Guide to employees and contractors, as well as presentation and discussion of its principles, is monitored and reported through the Company's HSEC audit program. In addition to the English version, the Guide is available in seven other languages commonly used at our sites around the world.
Resolution of business conduct issues is encouraged at the local level. If this is not possible, the issue can be raised with regional points of contact or telephone Business Conduct Helplines based in southern Africa (Johannesburg), Europe (London), Australasia (Melbourne), North America (Houston) and South America (Santiago, Chile). Helpline advisers have received training on business conduct issues. BHP Billiton does not track the phone number or location of callers to the Helpline. A confidential email address is also increasingly used. For issues related to fraud or bribery, the fraud hotline is contacted. Employees can escalate issues to the Global Ethics Panel. For further details, see Global Ethics Panel.
Global Ethics Panel
The Global Ethics Panel includes business representatives and corporate representatives from relevant functional areas — Group Audit Services, Human Resources and Legal — and two external representatives. John Fast, Chief Legal Counsel and Head of External Affairs, holds the position of Chairman. Our external representatives are Dr Simon Longstaff, Executive Director, St James Ethics Centre, and Graham Evans, current Chairman of the Victorian Competition and Efficiency Commission, former chairman of the Global Ethics Panel and former Head of External Affairs at BHP Billiton.
In addition to providing a high-level point of contact for employees, the Global Ethics Panel reviews on a quarterly basis all business conduct cases that have been raised through the Helpline or email system. It also assesses emerging policy issues and recommends to the Board appropriate changes to the Guide.
Anti-Trust Protocols
Anti-trust laws apply to virtually all industries and to every level of business and are designed to prohibit a variety of practices that restrain trade.
BHP Billiton has adopted Anti-trust Protocols that set out and confirm the minimum Anti-trust compliance standards expected of all Company personnel regardless of their specific job or location. The Protocols reflect the Group's ongoing commitment to its Guide to Business Conduct and corporate governance policies.
BHP Billiton decides and implements its own commercial strategy as regards production decisions, setting of prices and negotiating other terms of trade with its customers. It must not engage in any of the foregoing activities in concert with, or as result of, bilateral or multilateral contacts with its competitors, either directly or indirectly.
The Anti-trust Protocols are presented in three parts. The first is a short summary guide, entitled Do's & Don'ts, which is intended as a quick reference guide in point form. The second and third parts comprise the detailed BHP Billiton Anti-trust Protocols - Group Principles and Technical Benchmarking respectively. The summary Do's & Don'ts document is derived from the latter two documents.
Given the complexity surrounding international anti-trust compliance, with regulations constantly evolving and differing from jurisdiction to jurisdiction, BHP Billiton has established a panel of both internal and external experts to deal with any anti-trust issues facing any employee, officer or representative of the Group.
Risk Management
HSEC Management Standard 3 on Risk and Change Management outlines our approach to HSEC risk identification and management across our businesses. It requires that HSEC risks and opportunities are assessed, prioritised and managed, taking account of probability and potential consequence severity in order to prioritise and assign appropriate management and mitigation measures. We require all our operations to ensure these risks are recorded and maintained in a risk register, which is regularly reviewed and updated.
We have developed an HSEC Risk Management Guideline to further support our operations in implementing the requirements of our Management Standards. The BHP Billiton HSEC Consequence Severity Table is a central component of this risk management guideline. The Consequence Severity Table is utilised in determining the level of significance of actual or potential HSEC incidents and risk.
When a consequence severity is rated at 4 or above for health and safety and at 3 or above for environment or community, we classify the risk or incident as significant. For incidents, this triggers the need for reporting of the incident at the Corporate level and the formation of an independently led investigation team. For risks, we require thorough consideration of management and mitigation measures, taking into account consideration of the risk probability and exposure.
Significant HSEC risks for our businesses are incorporated into our Enterprise-Wide Risk Management strategy, as detailed below.
Enterprise-Wide Risk Management
Supporting the risk basis of the Management Standards is our Enterprise-Wide Risk Management (EWRM) strategy. This strategy embeds risk management processes into all our critical business systems, allowing us to adopt a precautionary approach to business management. When critical decisions are being made, managers are required to look beyond the obvious risks and recognise all sources of uncertainty, including issues related to health, safety, environment and community.
The embedding of risk management processes is taking place at all levels of the organisation, so that risks associated with changes or investments can be systematically identified and managed in a comprehensive and integrated way. Particularly, EWRM requires managers to understand the risks associated with the activities under their control and to manage them accordingly, and this acts to stimulate and reinforce accountability. The context of all our risk management activities is always the achievement of our business plan and strategic objectives. Because there is a continuous focus on the events and issues that might affect how and when those strategic objectives are achieved, we are building resilience into our business at all levels.
An advanced EWRM framework has been developed to steer implementation, comprising policy, standards and guidelines that set exacting standards for management. The consideration of HSEC risk is integral to this framework. Each asset and business has gone through an objective process of risk assessment and has evaluated its current risk management approach and systems against a standard. The risk assessments have highlighted where further control action is required, and this is now being taken. Where gaps in the system of risk management were identified, a risk management plan has been prepared and is being implemented.
Corporate governance requirements are satisfied by the assessment of progress in risk management plans and in improvements in risk control, which is reported to business-level risk management and audit committees that in turn report to the Risk Management and Audit Committee of the Board. For further details on the Risk Management and Audit Committee of the Board, refer to the Corporate Governance section on our Company website.
To coordinate all risk management activities, risk management 'champions' have been appointed at each operational location or function. They work as a Community of Practice, sharing information about initiatives and best practice.
A central element of the EWRM strategy is leveraging risk management information. The Company-adopted system assigns risks, controls and actions to accountable managers and enables management to track and report progress on all risk control activity. This system is also being used to 'roll-up' risk issues so that the Company can see all its major residual risks, along with opportunities for greater value creation through strategic risk management. The system is being used specifically to roll-up HSEC risks to obtain such a Company-wide perspective.
The ultimate aim of the Company's EWRM strategy is to embed risk management in all we do, so that it truly becomes everyone's responsibility.
View our Enterprise-Wide Risk Management Policy.
Investment Processes
New investments are essential for the Company to deliver on our strategic and financial objectives and to shape the organisation to best respond to the changing external environment. We clearly recognise, however, the potential risks and opportunities new investments pose to our commitment to sustainable development, and consequently have integrated the consideration of HSEC into our investment processes and decision-making.
Our investment system is based on a common approach across the organisation, using consistent processes, terminology, standards, tools and techniques. The system structure is sufficiently flexible to allow individual CSGs to deal with their specific circumstances and dovetail into the specific requirements of our investment process. Our investment system applies to capital investments, mergers, acquisitions and divestments, and bid-type investments. For other investment types, such as joint ventures, service and long-term purchase agreements, guidance as to how these investments should be reviewed as part of the investment system must be sought.
The Investment Review Committee (IRC) operates under powers delegated by the Office of the Chief Executive. The role of the IRC is to oversee the management approval processes for major investments. Those processes are designed to ensure that investments are aligned to the Group's agreed strategies and values; that risks are identified and evaluated, that investments are fully optimised to produce the maximum shareholder value within an acceptable risk framework, and that appropriate risk management strategies are pursued. The IRC oversees investment processes across the organisation and coordinates the Independent Peer Review and endorsement of major investments.
A tollgating process is utilised to ensure investments meet the requirements of our investment standards prior to progressing to the next stage of development. There are five phases to project development to which there are clearly aligned HSEC requirements that must be addressed, consistent with our Sustainable Development Policy and HSEC Management Standards requirements. These are outlined in the following table.
| Project Phase | Objectives | Summary HSEC Requirements |
|---|---|---|
| Concept |
|
|
| Pre-feasibility |
|
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| Feasibility |
|
|
| Execution |
|
Maintain HSEC management system developed throughout project development stages, consistent with the requirements of the HSEC Management Standards and the Sustainable Development Policy |
| Operation |
|
Independent Peer Reviews are integral to the assessment and approval of investments. They are undertaken by a cross-functional team of experts, one of which is an HSEC professional, independent of the investment proponents and generally from within the Company, who review the investment prior to the required tollgates. These reviews provide assurance that investment opportunities are robust and have undergone independent, rigorous and consistent reviews. They are essential, not only for satisfying our governance requirements, but also for providing the opportunity to add further value by drawing on the experience of the Independent Peer Review team.
Audit
Our HSEC Management Standards include a requirement for an auditing process to check that our Charter, Sustainable Development Policy and HSEC Management Standards are being applied, and to verify performance. The audits are designed to address the degree of implementation of our HSEC management systems and their effectiveness in meeting the Group's needs and those of the business being audited. Recommendations for improvement are made as required.
The HSEC Audit Protocol is based on the HSEC Management Standards and systems and performance management principles. The audit program is a triennial peer review process, with audit teams drawn from the HSEC function, operations personnel and external sources. It provides an objective view of site activities and systems and assists site managers through the identification of gaps in HSEC management programs. These gaps are addressed through monitored Performance Improvement Plans. The process provides assurance to the Group and the Board that the HSEC Management Standards are being implemented and identifies leading practices that can be shared across the Company.
During any year, those sites not scheduled for a Corporate HSEC audit must complete a self assessment against the Standards and prepare Performance Improvement Plans to progress to full conformance with the Standards.
The audit process is proving invaluable in accelerating the rate of improvement in all aspects of HSEC management through the identification and communication of leading practices. Refer to Our Performance: Audit and Self Assessment to view the results of our HSEC audit and self assessment process for the reporting period.
The review of the operation of our internal control systems, including the HSEC auditing process, is one of the roles of the Risk Management and Audit Committee, which is a committee of the Board. The Committee's responsibilities also include overseeing the appointment of the Vice President Risk Assessment and Assurance ( who is responsible for the Company's risk assessment, internal audit and insurance activities) and evaluating his or her performance. For further details on the Risk Management and Audit Committee of the Board refer to the Corporate Governance section on our Company website.
Stewardship
Stewardship is a principle that suggests that all involved in the lifecycle of a product should take responsibility for the impacts to human health and the natural environment that result from the production, use and disposal of the product. Those primarily involved in the lifecycle of a minerals product typically include the mining operation, the primary and secondary minerals processing facilities, manufacturers, retailers, consumers and governments. While the physical and chemical nature of metals ensures their infinite recyclability, we are working with commodity organisations to address lifecycle and product-stewardship considerations.
The Company has had an HSEC Management Standard dealing with product stewardship since the establishment of the Standards in 2001. The intent, as stated in Management Standard 12, is to promote 'The lifecycle HSEC impacts associated with resources, materials, processes and products are minimised and managed.'
In addition, we set and achieved a Company-wide target that lifecycle assessments (LCA) be prepared for all major minerals products by 30 June 2004. The LCA studies were conducted through research institutes and academia and in conjunction with commodity and industry associations such as the International Aluminium Institute, the International Copper Association and the Nickel Development Institute.
The global Green Lead™ project, as reported in our 2002 and 2003 HSEC Reports, is an initiative of the lead industry. Our Base Metals CSG is actively involved, primarily through the Cannington silver/lead/zinc operation in north Queensland, which initiated the project. The vision of the Green Lead™ project is to independently certify that producers are applying best practice to all aspects of the product lifecycle – mining, processing, transporting, treating, manufacturing, storing, using and recycling. A group of foundation project partners, representing industry stakeholders involved in mining, smelting, manufacturing and recycling, is implementing the project.
In addition, our Diamonds business is a member of the Kimberley Process Certification Scheme, an international diamond certification scheme aimed at halting the trade in 'conflict diamonds'.
Consumer health is also of growing importance to us, and we are involved with industry associations in progressing initiatives in this area. For example, we are currently working with the Nickel Development Institute in relation to the proposed EU Chemical Policy, which will require industry to demonstrate that 'chemicals' (which includes metal in this context) are safely produced and managed through their lifecycles.
For an update on our stewardship initiatives over the reporting period, refer to Our Performance: Stewardship.
