BHP : Safeguarding human rights across BHP's supply chain

10 December 2019, 10:00 AM

Tuesday marks the 70^th anniversary of the Universal Declaration of Human Rights, a historic and milestone document that sets out the fundamental rights to be universally protected.

In this edition of Prospects, BHP's Group Procurement Officer Sundeep Singh looks at the steps we're taking to safeguard human rights across our supply chain.

Safeguarding human rights across our entire supply chain is critical to the sustainability of our business.

Human rights are part of the fabric of our business that we uphold through our long-standing commitment to sustainability, integrity and respect.

While many companies have strong governance practices in place to protect the human rights of their people, it can be more challenging protecting the most vulnerable people in their supply chains.

That's why we work in partnership with our suppliers to make sure their commitments are in line with our own.

In the 2019 financial year, BHP sourced around 215,000 different types of materials and equipment in Australia alone. And globally, our supply chain consisted of around 10,000 partners and vendors, spanning across 60 countries. That's almost a third of all recognised world nations.

A supply chain, like all chains, is only as strong as its weakest link.

It only takes a human rights violation at one supplier to cause huge and lasting damage, which is why safeguarding human rights across our entire supply chain is critical to the sustainability of our business.

A supply chain, like all chains, is only as strong as its weakest link.

Last year, we launched our ethical supply chain pilot program to help vulnerable people by enhancing our suppliers' capability in managing human rights risks within their own supply chains.

It's a three-step process designed to ensure our current and prospective suppliers met a number of legal and compliance standards. It increases transparency, reduces risk, and sets the foundations from which we can create social value.

Step one: understanding our suppliers.

Businesses wishing to supply BHP must register through our Global Contract Management System (GCMS).

As part of this process, suppliers answer a series of questions relating to their governance, health and safety practices, anti-corruption processes, sanctions and human rights.

Step two: assuring compliance.

Once registered, suppliers are assigned a Human Rights risk level. Those identified as a 'high' or 'very high' risk are required to disclose more information.

If necessary, we work with third party auditors to review a range of labour conditions, including wage and working hours, workplace health and safety, environmental conditions and the frameworks they put in place to manage these risks.

Step three: continuous improvement.

These results are registered in the GCMS and a final risk score is calculated for each supplier.

If there is still a credible connection between a company's activities and a negative social or environmental impact, we collaborate with them to put a development plan in place to mitigate these impacts going forward, and encourage them to remedy where applicable adverse impacts have already occurred.

This level of transparency shows that human rights must be a critical business consideration for anyone that wants to do business with BHP.

Last year, we strengthened our minimum requirements for suppliers to cover the sustainable sourcing of biofuels. This means that biofuel suppliers must demonstrate the materials haven't been sourced in conflict with social, agricultural or environmental values.

For example, palm oil is a key ingredient in about half of all common consumer products, from margarine and chocolate to lipstick and shampoo. It's also used in biofuel for ignition emulsions used in mine blasting.

When sourced responsibly, the palm oil industry can bring great benefits to local communities. However, sustainability practices in this industry have not always been upheld. Rising demand for palm oil has led to the forced displacement of some Indigenous communities and in many cases, human slavery. The industry can also have a negative environmental impact through the loss of critical habitat for endangered orangutans, elephants, tigers and rhinos, as well as increased air pollution, soil erosion and water pollution.

This year, we collaborated with Dyno Nobel and invested in a blast technology research program with the ultimate aim of eradicating the use of palm oil in the explosive manufacturing process.

As a part of the agreement, Dyno Nobel will only use certified sustainable raw materials and products. If they use forestry-based products, including palm oil, they will give us information on the country and company of origin, and evidence that they are certified in line with the Roundtable on Sustainable Palm Oil.

If palm oil is included, Dyno Nobel will include a timeline and plan for its replacement with an alternative product.

This level of transparency shows that human rights must be a critical business consideration for anyone that wants to do business with BHP.