Refer to the following sections for an overview of sustainability at BHP Billiton:

Introduction

The most commonly stated definition of sustainable development is that of the World Commission on Environment and Development (Bruntland Commission) of 1987. In the Commission’s report, Our Common Future, sustainable development is defined as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’.

The longevity and popularity of the Bruntland definition reflects the fact that most people can subscribe to a concept that suggests that, as a global society, we should live our lives in a way that leaves the planet in a state that provides our children with at least the same lifestyle and opportunities we enjoyed.

The Bruntland definition does not, however, provide much in the way of guidance to companies seeking to understand how their business activities may or may not fit within a sustainable development framework. There have been many attempts to further define the notion and provide greater practical guidance. The Triple Bottom Line (TBL) concept developed by SustainAbility (www.sustainability.com/home.asp) in the UK has struck a chord with many in business as a logical framework within which to assess their businesses. The TBL concept argues that, to be sustainable, a company must perform against three bottom lines rather than focusing only on the traditional financial bottom line. That is, the company must be on the positive side of the ledger in relation to financial performance, environmental protection and social development. The concept has led to the emergence of the TBL (non-financial) performance reports produced by many large companies.

The three elements of the triple bottom line are also frequently referred to as the three pillars of sustainable development. Governance is often added to this model as the foundation on which the pillars stand, underpinning the integrity and ultimate success of any attempt to achieve sustainability.

Clearly, the elements are interlinked and need to be managed in an integrated manner. Companies that operate in a way that enhances social and environmental performance while destroying shareholder value will not be sustainable. Similarly, companies that generate outstanding returns to shareholders but leave the community to bear the costs of significant environmental and social degradation will not be sustainable in the long term.

While the TBL concept has helped people think about sustainable development in a business context, the reality is that businesses are still valued by the sharemarket on the basis of their performance against traditional financial metrics – the single financial bottom line – and this is likely to remain the case for the foreseeable future. The markets are, however, increasingly taking non-financial factors into account in their assessment of companies’ ability to continue to generate financial returns. The effective management of non-financial issues is recognised as an increasingly critical part of effective risk management. For a company to effectively enhance shareholder returns over the long term, it must effectively manage non-financial issues as well. There is increasing evidence that companies that manage the environmental and social performance of their business well also outperform the general market in terms of traditional financial metrics.

Resource extraction is often considered to be an unsustainable industry because the resources that it exploits are non-renewable and are undeniably depleted by the activity. While this is certainly true at present, advances in technologies required to find, develop and process resources are outstripping the rate of exploitation.

More importantly, however, sustainable development should also be considered in the context of society as a whole. For example, while a particular mine site will not be sustainable because the ore-body will be depleted over time, the mine can still make a valuable contribution to a society’s overall pursuit of sustainable development. The mine creates employment, provides the opportunity for training and skills enhancement, pays taxes and royalties that can be contributed to government services such as education and health care and provides the opportunity for support and spin-off industries. Mining also contributes products that are essential to all modern societies and economies. Without materials generated by the mining industry, basic needs such as shelter, transportation and energy would not be met. The mining process can therefore be seen as transforming a form of natural capital (mineral resources) into social capital (infrastructure, skills etc.) that can then contribute to further development.

We recognise, however, that simply arguing that the value of our products outweighs any environmental or social impacts is not acceptable, and hence we have been progressing a number of initiatives to better understand how we can minimise our impacts while maximising our broader contributions to society.

To this end, in 1998 we joined with a number of other mining companies to establish the Global Mining Initiative, a major component of which was the Mining, Minerals and Sustainable Development (MMSD) study (www.iied.org/mmsd/). The MMSD study was a major independent study aimed at better understanding the role of the mining industry in a sustainable future.

MMSD considered that, in the context of the minerals sector, the goal for sustainable development should be ‘to maximise the contribution to the well-being of the current generation in a way that ensures an equitable distribution of its costs and benefits, without reducing the potential for future generations to meet their own needs’. To facilitate this, the MMSD study developed the following key principles of sustainable development:

Economic sphere

Social sphere

Environmental sphere

Governance sphere

While the principles outlined above are organised in different spheres, it should be recognised that they are all interdependent. Individual sites can therefore be operated in a manner consistent with these principles while contributing more broadly to society’s overall pursuit of sustainable development.

We have clearly articulated our commitment to sustainable development in the Company Charter, HSEC Policy and HSEC Management Standards. As outlined in the section on Our approach to sustainable development, this commitment provides a consistent framework aligned to the principles above, designed to reduce the environmental impact of our businesses, enhance the societal benefit of our operations and produce superior returns for our shareholders. (For further details on the business case for sustainable development, refer to the section on The business case.)

There are, however, significant challenges that we must address as we progress. Refer to the section on our Sustainability challenges for further details.

The journey towards sustainable development is not ours alone. It is about partnerships and engagement with all our stakeholders. Only through the cooperative efforts of many will society be able to pursue sustainable development.

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