Key Management Processes
Wherever BHP Billiton operates, HSEC aspects are addressed in its 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.
A number of key management processes exist across the Company to ensure there is a common approach to the consideration of HSEC in business decisions. Read more:
Business Conduct
BHP Billiton adopts an integrated approach to business conduct, comprising the BHP Billiton Guide to Business Conduct, regional hotlines and the Global Ethics Panel.
Guide to 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 our entire 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 such as conflict of interest, financial inducements and bribery, insider trading and political contributions.
The Guide and its principles are embedded throughout 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.
Regional helplines
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 the telephone-based Business Conduct Helplines based in southern Africa (Johannesburg), Europe (London), Australasia (Melbourne), North America (Houston) and South America (Santiago). 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 Group Audit Services Fraud Hotline can be contacted. Employees can escalate issues to the Global Ethics Panel. Read more: Global Ethics Panel.
Global Ethics Panel
The Chief Executive Officer (CEO) has established the Global Ethics Panel to assist him in meeting the requirements of the Board Governance Document relating to the ethics and culture of the Group. The CEO is required to ensure that the culture of the Group does not develop in a way that condones dishonest conduct or lack of integrity, respect or dignity in relationships amongst those involved in or affected by the Group's activities.
The role of the Panel includes advising the CEO on matters affecting the values and behaviours of the Group; assisting business leaders in assessing acceptable outcomes in cases where adjudication is required; reviewing the rationale, structure and content of the Guide to Business Conduct; promoting and facilitating effective implementation of and compliance with the policies and standards contained in the Guide; reporting regularly on compliance with the Guide; and overseeing processes for handling breaches of business conduct. In 2006, the role of the Panel was formalised by the adoption of a charter outlining its scope of responsibility.
The panel is chaired by Karen Wood, Special Advisor to the CEO and Head of Group Secretariat. In 2006, the number of panel members was expanded from six to ten. Panel members include internal and external members selected to achieve a mix of knowledge and experience of the Group’s operations, with knowledge and experience in contemporary aspects of ethics and culture that are relevant to the Group.
Internal members:
- Karen Wood, Special Advisor to the CEO and Head of Group Secretariat (Chairman)
- Marcus Randolph, Chief Organisation Development Officer
- Stefano Giorgini, Vice President Risk Management and Assurance
- Stephen Mitchell, Regional Counsel Europe/Africa
- Ian Ashby, President and Chief Operating Officer, Western Australia Iron Ore
- Vincent Maphai, Chairman South Africa
- Mike Anglin, Vice President Operations and Chief Operating Officer, Base Metals
- Holly Lindsay, Vice President Public Policy and Business Conduct (Holly also acts as Panel Secretary).
External members
- Dr Simon Longstaff, Executive Director, St James Ethic Centre
- Graham Evans, Chairman of the Victorian Competition and Efficiency Commission
Read more: Global Ethics Panel Member Profiles
Read more: Global Ethics Panel Charter
Anti-trust protocols
Anti-trust laws 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 detailed BHP Billiton Anti-trust Protocols - Group Principles
- Technical Benchmarking
- a short summary guide, entitled Do's & Don'ts, intended as a quick reference guide in point form. 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
The Company has a Risk Management Policy and uses a common framework across all operations and functions to identify, assess and monitor risks. This includes business and HSEC risks and includes risks associated with projects and investment opportunities.
Our risk management methodology includes an assessment of ‘country risk’ where the social, political, economic or other factors related to the countries in which we operate or plan to operate can impact on our operations, business or reputation.
Our common risk management framework is called Enterprise-wide Risk Management (EwRM). The risk management processes covered by EWRM are consistent with the Australian Standard - AS4360.
HSEC Management Standard 3 – Risk and Change Management establishes expectations of how HSEC risks are to be managed within the EwRM framework.
The EwRM framework requires all operations and business groups to establish and maintain a register of their significant risks. The risk registers are stored on a common, company-wide database and include details of the individual risks and the measures in place for their management. Risk control measures include individual accountabilities where appropriate. Risk reduction plans are implemented when risks are assessed to be unacceptable.
Operations and business groups are required to review and update their risk registers annually. A range of risk assessment and management guidelines are available to operations and business groups. A network of Risk Champions and HSEC specialists is also available to assist operations and business groups achieve a high level of consistency in the application of the Company’s Risk Management Policy and Standards.
Risks are assessed and ranked using a common methodology. This allows direct comparison of risks across different assets and business groups.
Operations and business groups undertake annual self-assessments of their risk management processes. Risk Management (Improvement) Plans are developed based on identified shortcomings.
Operations and business group risk registers, risk management performance and Risk Management Plans are reviewed every six months during Risk and Audit Committee meetings. These meetings include an independent Board member and senior executive management.
A company-wide risk profile has been developed and is updated every six months. This profile includes the significant risks rolled up from the operations and business group risk registers. It also includes key strategic risks identified by executive management.
The company-wide risk profile, and the plans to manage or mitigate the risks, is reviewed annually by the company Board.
Operations and business groups are required to develop and maintain emergency response, crisis management and business continuity plans consistent with their business and HSEC risks. Exercises and simulations are routinely conducted at operations and within corporate groups to test our capacity to respond to emergencies and to manage crises.
Incident Reporting and Investigation
The BHP Billiton HSEC Management Standard 13 directs our approach to incident reporting and investigation: ‘HSEC incidents, including near misses, are reported, investigated and analysed. Corrective and preventive actions are taken and learnings shared’.
All incidents at BHP Billiton controlled sites and activities are reported.
A significant (HSEC) iIncident is any occurrence that has actually resulted in or had the potential to result in the descriptors outlined in the shaded areas of the BHP Billiton Consequence Severity Table. These are incidents rated in the Table as:
- Level 4 or higher, for Injury and Illness
- Level 3 or higher for all other incident types.
Our definition of significance is conservative to ensure all learnings are captured from relevant HSEC incidents. We recognise that categorising an event as 'significant' may create unneccesary cause for concern by external stakeholders but consider it is important that these incidents are given adequate profile internally.
Incidents defined as a significant HSEC incident are investigated using the Incident Cause and Analysis Methodology (ICAM).
ICAM provides a process to identify what led to the event so that effective corrective and preventive actions can be implemented to prevent recurrence. It does not apportion blame or liability. The Company has, on average, four trained ICAM investigators per 100 site-based personnel. Investigators are drawn from all areas of the business, with a range of experience and knowledge.
In the event of a significant incident, it is our policy that associated work does not resume until actions have been taken to reduce the risk of recurrence and authorisation to resume work is given at the appropriate level.
Information gathered from near miss and significant incidents is analysed to identify lessons and to monitor trends and is reported to management to improve standards, systems and practices. Learnings are shared across the organisation and with stakeholders and others as appropriate. Systems are in place at all our operations to ensure that all remedial actions, including changes in procedures, are documented, communicated, followed-up and completed.
Read more: Safety>Our Approach>Near Miss and Significant Incident Reporting.
Investment
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's structure is sufficiently flexible to allow individual CSGs to deal with their specific circumstances and dovetail into the specific requirements of our Group investment process. Our investment system applies to capital investments, mergers and acquisitions, as well as to divestments.
The Investment Review Committee (IRC) operates under powers delegated by the Chief Executive Officer. The role of the IRC is to oversee the management approval processes for major investments with a threshold of US$100 million or more. 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 phase 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 |
|
|
Feasibility |
|
|
| Project Phase | Objectives | Summary HSEC Requirements |
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 and global perspective 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 Program 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 program 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 results of the HSEC Audit Program is one of the roles of the Sustainability Committee of the Board. The review of the operation of our internal control systems, including the HSEC auditing process, is one of the roles of the Risk and Audit Committee, which is also a committee of the Board. The Committee's responsibilities also include overseeing the appointment of the Vice President Risk Management 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 and Audit Committee of the Board refer to the Corporate Governance section on our Company website.
