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Stakeholder Influence on Corporate Reporting: An Exploration of theInteraction Between the World Wide Fund for Nature and the Australian

Minerals Industry

byCraig Deegan and Christopher Blomquist

Faculty of Commerce, University of Southern Queensland

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AbstractThis paper documents a case study that explores the influence an initiative of theWorld Wide Fund for Nature (WWF) environmental conservation organisation hadon the environmental reporting practices of the Australian Minerals Industry. In Mayof 1999 the WWF independently produced a Mining Company Environmental ReportScorecard, in which it evaluated the environmental reports of eleven Australianminerals companies. These eleven companies are voluntary signatories to theAustralian Minerals Industry Code for Environmental Management, a codedeveloped and maintained by the Minerals Council of Australia (MCA). As part ofthe corporations’ obligations under the Code, they are required to produce anenvironmental report within two years of signing the Code. All companies had beensignatories for at least two years.

The objective of this study is to consider whether the WWF, through the Scorecard,had an influence on the reporting policies of the Australian Minerals Industry, interms of the MCA, the Code, and the individual minerals companies which were thesubjects of the WWF's Scorecard. Another objective is to investigate WWF’s viewsabout how effective the Scorecard is in creating change in the environmentalreporting practices of Australian mining companies. The study contributes to thelimited amount of research that has been conducted to date with regard to theinfluence that lobby groups have on corporations. In this study the evidence suggeststhat the views of WWF influenced revisions to the Code, as well as the reportingbehaviour of individual mining companies.

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IntroductionResearch investigating whether lobby groups are a source of pressure upon thereporting practices and policies of profit seeking organisations is limited (forexample, Tilt 1994; 1997). Despite this, there appears to exist a general presumptionin the social and environmental accounting literature that lobby groups are a majorsource of pressure upon the social and environmental operating practices and relateddisclosure policies of companies (for example, Heard and Bolce 1981, Parker 1986,and Patten 1992).

What has been lacking in the literature are studies that directly seek the views ofcorporate management about how they react to particular lobby group activities. Theaim of the current study is to contribute to the research regarding whether lobbygroups are a source of pressure upon the social disclosure practices of corporations,and to determine whether presumptions made to the effect that lobby groups are amajor source of influence upon corporations can be substantiated. If the resultsindicate that such claims cannot be supported then the view that particularconstituencies’ expectations, as represented by the officers of large lobby groups towhich they belong, influence corporate behaviour (for example, corporate reportingpractices) might be challenged.

The study seeks to achieve the above aims by examining a fairly unique case studyinvolving the World Wide Fund for Nature (WWF) environmental conservationorganisation, and its recent interactions with the Minerals Council of Australia(MCA), and with individual companies operating within the Australian mineralsindustry.

This paper is organised as follows: We firstly provide a background to the keyparticipants in this case study, namely WWF and members of the Australian mineralsindustry. We then provide an overview of some theoretical perspectives which havethe potential to explain the possible effects of WWF’s initiative. This is thenfollowed by details of the research design. The subjects’ responses to variousquestions are then provided followed by discussion which attempts to link theresponses to theoretical perspectives provided earlier in the paper. Concludingcomments are then provided.

Background to the key participants in this case studyThe Mineral Council of AustraliaThe MCA is the nationally recognised organisation for issues of management and co-operative action for the Australian Minerals Industry. According to its Annual Report1998, the MCA’s Mission is to:

promote the development of a framework that encourages safe, profitableand environmentally responsible minerals exploration, production,

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processing and marketing capable of sustaining an internationallycompetitive minerals industry attuned to community expectations.

The MCA has numerous functions, which include liasing with key governmentdecision makers and providing direct input into policy setting agendas, providing up-to-date information to members, participating in unified industry initiatives, andmaintaining close working relationships with other industry associations andchambers both within Australia and overseas (as noted on the MCA website:www.minerals.org.au). Twenty directors are elected to the Executive Committee ofthe MCA, and consist of senior executives of mining, mineral processing and miningservice companies, as well as nominated representatives from State Chambers ofMines and Minerals Councils.

On the 10th of December 1996, the MCA launched the Australian Minerals IndustryCode for Environmental Management (hereafter referred to as the Code), whichaccording to the MCA Annual Report, 1998 (p. 12), “represented a first in theminerals industry world-wide”. The Code was voluntarily conceived and launched bythe Australian minerals industry and acts as a framework for, and the centrepiece of,a commitment by the minerals industry to continual improvement in environmentalmanagement and communication in the minerals industry (as discussed in the MCAAnnual Report 1998, and in the Australian Minerals Industry Code forEnvironmental Management, 1996).

As stated within the Code, the Code was developed in recognition of the fact that:

more than in any other way, the community judges the minerals industry by itsenvironmental performance [and there exists a] need to achieve environmentalexcellence and to be open and accountable to the community.

Adoption of the Code is voluntary and open to all minerals companies, as the Codedoes not set entry standards. The key principles of the 1996 Code (nine) are providedin Appendix 1 to this paper. In this study we are particularly interested in the last ofthe nine principles. That is, on the reporting obligations of the Code. What shouldalso be acknowledged at this point is that the MCA intends to review the Code atregular intervals. The first major revision of the Code took place in late 1999, and arevised version of the Code was released in February 2000. What is of interest to usin this study is whether the actions of WWF (to be described shortly and relating tothe 1996 version of the Code) appear to have had any impact on the contents of therevised Code.

Pursuant to the Code, the ongoing implementation of the Code by signatories must beevaluated by qualified externally accredited auditors from within the company, or byaccredited external auditors appointed by the company, at least every three years.

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According to the MCA, numerous parties were consulted regarding the content andapplication of the Code, including state and federal government agencies, mineralscompanies and industry bodies, as well as non-government organisations such asconservation groups, overseas aid organisations, and Aboriginal interests. By thebeginning of 1999, 41 mineral exploration and development companies hadvoluntarily signed to the Code, with more than 250 sites around the world and 85%of production by the Australian minerals industry covered by the Code.

In accordance with the reporting principle of the 1996 Code, regular public reportingon environmental performance must be undertaken by Code signatories. Companiesmust provide an annual public environmental report, which details the company'sprocesses for:

• communicating environmental policy;• communicating environmental performance;• community consultation and responding to concerns; and• Code implementation.

According to the Code, reports should also include among other items, details such asorganisation profile, environmental policies and objectives, establishment ofbenchmarks, opportunities and progress in improvements, prosecutions andsignificant environmental incidents, performance in relation to regulation and internaltargets, and details of environmental and heritage issues.1 The first environmentalreport is required to be prepared within two years of registering to the Code.

World Wide Fund for NatureAccording to the WWF’s international website, WWF was officially formed andregistered as a charity on 11 September 1961 and now consists of a global network of24 National Organisations, 5 Associates, and 26 Programme Offices. NationalOrganisations carry out conservation activities in their own countries, and contributeto the WWF’s international conservation programme, while Programme Officesimplement the WWF's fieldwork, advise governments and raise public understandingof conservation issues. Since 1985, the WWF has invested over US$1,165 million inmore than 11,000 projects in 130 countries (according to the WWF’s website, atwww.panda.org). Within Australia, the WWF has been operating for over twentyyears.

One of the fundamental components of WWF's work is promoting the sustainable useof natural resources. In relation to the mining industry, the WWF actively participatesin debate and works with Governments, minerals companies and industryassociations on a number of projects in order to identify policies and mechanisms

1 Reflecting the use of the word ‘should’, not all minerals companies that are reporting as signatories ofthe Code actually disclose all of this listed information.

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which encourage the mining sector to improve its environmental performance, socialperformance, and reporting, and therefore contribute to ecologically sustainabledevelopment (WWF, 1998; 1999). In May of 1999, the WWF completed anevaluation of the environmental reports of the eleven minerals companies that hadbeen signatories of the Code for at least 2 years (all reports were produced by 31March 1999) and published the results in a report entitled Mining EnvironmentalReports: Ore or Overburden? This initiative was undertaken independently of theminerals industry. The act of ‘scoring’ environmental reports is not new. Since themid-1990s the UK organisation, SustainAbility in conjunction with the UnitedNations Environment Program, has been assessing reports as part of their‘Benchmark Surveys’. Also, around the mid 1990s environmental reporting awardswere introduced which assessed reports against certain criteria, the most notable ofwhich are the UK environmental reporting awards under the auspices of theAssociation of Chartered Certified Accountants (ACCA). Such awards now exist inmany countries. What is new about the WWF’s scorecard, however, is that it hasbeen developed and administered by an NGO.

The report, Mining Environmental Reports: Ore or Overburden?, centres around theMining Environmental Report Scorecard, which identify criteria developed by theWWF in order to assess the environmental reports produced by mining companies.2

The report pertaining to the Scorecard, and the way it was reacted to by the MCAand individual mining companies, is the focus of this case study.

The Scorecard contains a number of reporting criteria against which the companies’environmental reports were ‘scored’. Once selected, the criteria were weightedaccording to the WWF's opinion of the relative importance of the various criterions.The criteria represent key elements which the WWF believes are importantcomponents of environmental reports.3 The criteria, as they appear in the Scorecard,are identified in Table 1 below:

2 Importantly, it should be acknowledged that WWF is not assessing actual environmental performance.Rather, it is assessing the reporting of that performance.3 The WWF did not directly seek input from any other-stakeholder groups as to the selection of theperformance indicators. Therefore, other stakeholder groups may hold differing opinions as to what isimportant in an environmental report.

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Table 1: Reporting criteria adopted by WWFPerformance indicators weightingExternal Verification - independent assessment and verification ofreport content improves the credibility of the report

15 %

Environmental and Social Issues - the report should identify theenvironmental and social issues relevant to the company's operations

15 %

Environmental Policy - the policy should detail a commitment to theenvironment and how the commitment will be met

10 %

Environmental Management Processes - the report should providequantitative and qualitative information on how environmental issuesare managed and how environmental performance is improved

10%

Data - data enables quantitative assessments and comparisons ofcompanies’ environmental performance

15 %

Compliance - information which indicates the extent to which thecompany is meeting its operating licences and its own internalstandards

10 %

Stakeholder Participation - information regarding the consultationprocess and the extent to which it is incorporated into site activities

10 %

Targets - environmental performance targets demonstrate acommitment to improving environmental performance

10%

Format, Dissemination - the report should be easy to understand,transparent and open, and be readily available both in hard copy andon the internet, and have a feedback mechanism

5 %

The results of the Scorecard indicated that the eleven mining companies’environmental reports varied widely in quality (using WWF’s scoring criteria as thebasis of quality). For example, some reports scored reasonably well, such as those ofWMC and RGC (77 and 66 out of a possible 100 respectively). Other reports scoredfairly poorly, including those of Mt Lyell, Powercoal, and Rio Tinto, with scores of26, 36 and 37 respectively.4

Areas in which WWF considered there were significant deficiencies includedexternal verification, information regarding environmental management processes,and the setting of company targets. It also appeared that the Code's Principleregarding ‘Community Partnership’ (similar to WWF’s criteria of ‘StakeholderParticipation’) had been almost completely ignored by signatories. Most companieshad environmental policies well covered in their reports, and most had adequatelyoutlined the environmental and social issues relevant to their corporations. The WWFreport concludes that in the their view, most of the environmental reports evaluated 4 For the total group the respective scores were: WMC 76.8%; RGC 65.6%; BHP 53.7%; Placer 50.4%;North 50.2%; Normandy 49%; MIM 38.9%; Michealago 37.2%; Rio Tinto 36.9%; Powercoal 36.2%,Mt Lyell 25.9%.

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do not adequately address the requirements of the Code, let alone the requirementsfor satisfactory environmental accountability. WWF stated in the report that it intendsto communicate these deficiencies and its concerns to both the individual companies,and to the MCA.

It is reasonable to expect that the WWF embarked upon its Scorecard because itbelieved that it could make a difference – that it could lead to an improvement in theenvironmental reporting practices of Australian minerals companies. But why would,or could, WWF make such a difference? We can now briefly consider sometheoretical perspectives that could be applied to answer this question. The theoreticalperspectives provide insights about how organisations (such as the MCA and theindividual minerals companies) might be expected to react to pressure exerted byoutside groups. We will subsequently consider the evidence collected in respect ofthis specific case study, before determining whether the apparent reaction of theAustralian minerals industry can appear to be explained by the theoreticalperspectives described below.

Theoretical perspectives to explain the potential reaction of the mineralsindustryTwo theoretical perspectives that have been used frequently in recent years in anattempt to explain corporate social and environmental reporting practice arestakeholder theory and legitimacy theory (for example: Ullman 1985; Roberts 1992;Clarkson 1995 for stakeholder theory, and Hogner 1982; Guthrie and Parker 1989;Patten 1992; Deegan and Rankin 1996; Neu, Warsome and Pedwell, 1998; Buhr1998; and O’Donovan 1999 for legitimacy theory). It is not the intention of this paperto provide a detailed description of these theories as such descriptions can be foundelsewhere5.

Both stakeholder theory and legitimacy theory are derived from the broader politicaleconomy theory (Gray, Owen and Adams, 1996). Political economy theory acceptsthat society, politics, and economics are inseparable so that issues, such as economicissues, cannot be considered in isolation from social and environmental issues. Gray,Owen and Adams (1996) note that political economy theory, legitimacy theory andstakeholder theory may essentially be seen as broadly similar,

in that each is concerned with, on the one hand, the power of society (orgroups within it) to pressurise organisations into disclosure (whetherthrough legislation or the threat of legislation) while, on the other hand, thedesire and ability of the organisation to use information (and particularlysocial and environmental accountability) to legitimate, to deflect criticism,and to control the debate being held in the wider community (p.48).

5 For example, see Mathews, 1993; Gray, Kouhy and Lavers, 1995; Gray, Owen and Adams, 1996;Deegan, 2000.

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Political economy theory has been divided into two broad streams which Gray, Owenand Adams (1996, p. 47) have classified as ‘classical’ and ‘bourgeois’ politicaleconomy. Classical political economy is related to the works of philosophers such asKarl Marx and explicitly places “sectional (class) interests, structural conflict,inequity, and the role of the State at the heart of the analysis” (Gray, Owen andAdams, 1996, p. 47). This can be contrasted with ‘bourgeois’ political economytheory which, according to Gray, Kouhy and Lavers (1995, p. 53) largely ignores theseelements and, as a result, is content to perceive the world as essentially pluralistic (inwhich the interests of particular groups do not necessarily dominate the interests ofothers). Stakeholder theory and legitimacy theory are grounded in the ‘bourgeoisbranch’ of political economy theory (Gray, Owen and Adams. 1996).

Legitimacy theory posits that organisations continually seek to ensure that theyoperate within the bounds and norms of their respective societies, that is, that theyattempt to ensure that their activities are perceived by outside parties as being‘legitimate’. Legitimacy theory relies upon the notion that there is a ‘social contract’between the organisation in question, and the society in which it operates. The ‘socialcontract’ is not easy to define but the concept is used to represent the multitude ofimplicit and explicit expectations that society has about how the organisation shouldconduct its operations (Donaldson, 1982).

This perspective assumes that society allows the organisation to continue operationsto the extent that it generally meets their expectations. Legitimacy theory emphasisesthat the organisation must appear to consider the rights of the public at large, notmerely those of its investors. Failure to comply with societal expectations (that is,failure to comply with the terms of the ‘social contract’) are theoretically linked tosanctions being imposed by society, for example, in the form of legal restrictionsimposed on its operations, limitations on resources (for example, financial capitaland labour) being provided, and reduced demand for its products.

Given the potential costs (sanctions) associated with conducting operations that aredeemed to be outside the terms of the “social contract”, Dowling and Pfeffer (1975)state that organisations will take various actions to ensure their operations areperceived to be legitimate. One central action is public disclosure of information(referred to as the process of ‘communication’). As community expectations change,organisations must adapt and change, and importantly, such changes must becommunicated.6

6 In relation to the dynamics associated with changing community expectations, Lindblom (1994, p.3)states: “Legitimacy is dynamic in that the relevant publics continuously evaluate corporate output,methods, and goals against an ever evolving expectation. The legitimacy gap will fluctuate without anychanges in action on the part of the corporation. Indeed, as expectations of the relevant publics changethe corporation must make changes or the legitimacy gap will grow as the level of conflict increases andthe levels of positive and passive support decreases.” The ‘legitimacy gap’ refers to the difference

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Lindblom (1994) also stresses the role of public disclosure in assisting anorganisation to maintain or restore its legitimacy. She proposes that if an organisationperceives that its legitimacy is in question it can adopt a number of strategies. Theorganisation can:1. seek to educate and inform its ‘relevant publics’ about (actual) changes in

the organisation’s performance and activities;2. seek to change the perceptions of the ‘relevant publics’ - but not change its

actual behaviour;3. seek to manipulate perception by deflecting attention from the issue of

concern to other related issues through an appeal to, for example, emotivesymbols; or

4. seek to change external expectations of its performance.

External reporting is a key vehicle in achieving each of the above strategies.

Consistent with the perspective provided by legitimacy theory, the MCA has madepublic statements about the need to act in a manner consistent with communityperceptions (that is, in accordance with the ‘social contract’ – though they use theterm ‘license to operate’). For example, in the 1998 Annual Report of the MineralsCouncil of Australia it is stated in relation to environmental performance that (p. 12):

The environmental performance of the Australian minerals industry is anessential requirement for the industry’s continued viability and success. It isonly on the basis of high quality environmental performance and throughstriving for continual improvement in environmental management that theindustry can credibly influence government environmental policies and seekthe community’s acceptance of the industry’s licence to operate.

From a legitimacy theory perspective we might initially be able to explain theestablishment of the Code as a response to community concern about the environmentand how the mining industry impacts the environment7. Also, we might predict that ifthe MCA considers that the views of the WWF are reflective of wider communityconcerns and expectations then the MCA, and individual companies, may perceive aneed to react to the concerns of WWF. Further, by embracing the views of the WWF,the minerals industry could be aligning itself to what could reasonably be perceived asan organisation with a solid, or reputable, social standing. Whether the minerals

between the ‘relevant publics’ expectations relating to how an organisation should act, and theperceptions of how they do act.7 As one indicator of community concern, a Federal Government report entitled Environmental Issues:Peoples’ Views and Practices (Australian Bureau of Statistics, 1997) stated that 70 percent of peoplesurveyed considered that environmental protection measures were as important as economic growth.The report also indicated that the majority of respondents considered that the quality of the environmenthad declined during the previous decade and that this was of concern.

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industry do react, or not, and whether they embrace the views of the WWF in a waythat might be explained by legitimacy theory will be something that we explore in thispaper.

We will now turn our attention to stakeholder theory. Stakeholder theory has both anethical (moral) or normative branch, as well as a positive (managerial) branch(Deegan, 2000). In attempting to explain the actions of the MCA and the miningcompanies with respect to the WWF’s Scorecard, we can adopt the positive(managerial) branch of stakeholder theory.

There are many similarities between legitimacy theory and stakeholder theory, and assuch, to treat them as two totally distinct theories would be incorrect (Gray, Kouhyand Lavers 1995, p. 52).

Gray, Owen and Adams (1996, p. 45) provide a description of themanagerial/positive branch of stakeholder theory:

Here the stakeholders are identified by the organisation of concern, byreference to the extent to which the organisation believes the interplaywith each group needs to be managed in order to further the interests ofthe organisation. (The interests of the organisation need not be restrictedto conventional profit-seeking assumptions). The more important thestakeholder to the organisation, the more effort will be exerted inmanaging the relationship. Information is a major element that can beemployed by the organisation to manage (or manipulate) the stakeholderin order to gain their support and approval, or to distract their oppositionand disapproval.

Within legitimacy theory, as previously discussed, the audience of interest is typicallydefined as the society although some researchers, such as Lindblom, refer to ‘relevantpublics’ rather than society as a whole. According, to Neu et al. (1998), the use of theterm 'relevant public' acknowledges the differential power of the various partiesexternal to the organisation. In a sense, the use of the term ‘relevant publics’ can beperceived as referring to a particular group of stakeholders – further ‘blurring’ thedifference between legitimacy theory and stakeholder theory. In a similar argument,Oliver (1991, p. 162) proposes that the actions of an organisation in response to thedemands of external parties are "influenced by the number of external publics, theconvergence or divergence of their interests, and the influence that the externalpublics may exert upon the organization". It is therefore apparent that the process oforganisational legitimation may take place in relation to any of a number of 'relevantpublics', and that an organisation attempting to achieve a state of legitimacy may berequired to balance the legitimation process between 'relevant publics'.

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Within the managerial branch of stakeholder theory the organisation is considered tobe part of the wider social system (as in legitimacy theory), but this perspective ofstakeholder theory specifically considers the different stakeholder groups withinsociety and how they should best be managed if the organisation is to survive (hencewe call it a managerial perspective of stakeholder theory)8. Like legitimacy theory, itis considered that the expectations of the various stakeholder groups will impact theoperating and disclosure policies of the organisation. The organisation will notrespond to all stakeholders equally (from a practical perspective, they probablycannot), but rather, will respond to those that are deemed to be ‘powerful’. Nasi, Nasi,Phillips, and Zyglidopoulos (1997) build on this perspective to suggest that the mostpowerful stakeholders will be attended to first.

A stakeholder’s (for example, owners, creditors, or regulators) power to influencecorporate management is viewed as a function of the stakeholder’s degree of controlover resources required by the organisation (Ullmann, 1985). The more critical thestakeholder resources are to the continued viability and success of the organisation,the greater the expectation that stakeholder demands will be addressed. A successfulorganisation is considered to be one that satisfies the demands (sometimesconflicting) of the various powerful stakeholder groups. In this regard Ulmann (1985,p 2) states:

our position is that organisations survive to the extent that they are effective.Their effectiveness derives from the management of demands, particularlythe demands of interest groups upon which the organisation depends.

According to Ullman (1985), the greater the importance to the organisation of therespective stakeholder’s resources/support, the greater the probability that theparticular stakeholder’s expectations will be incorporated within the organisation’soperations. Under this perspective, various activities undertaken by organisations,including public reporting, will be directly related to the expectations of particular(powerful) stakeholder groups.

The managerial branch of stakeholder theory can be used to provide possiblepredictions about the impact the WWF could have on the environmental reportingpractices of the Australian minerals industry. If it is accepted that WWF is a‘powerful’ stakeholder (perhaps because of its large membership who make variousconsumption and investment decisions, or perhaps because of its ability to lobbygovernment) then the MCA and the individual mining companies may feel a need toreact to WWF’s expectations. Conversely, if WWF is not deemed to be a powerfulstakeholder group (their views or support are not expected to influence the success of 8 By comparison, Donaldson and Preston (1995) refer to the instrumental perspective of stakeholdertheory in which the principal focus of interest is the proposition that corporations practising stakeholdermanagement will be relatively successful in conventional performance terms. This is obviously similarto the ‘managerial’ perspective of stakeholder theory.

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the minerals industry) then the concerns may be ignored in favour of the concerns ofother, more ‘powerful’, stakeholder groups. The interviews conducted as part of thisstudy will indicate whether the Australian minerals industry has reacted to theconcerns of the WWF, and provide possible reasons why (and we will then considerwhether the reasons appear consistent with the basic tenets of stakeholder theory).

Having briefly considered two theoretical frameworks that could be applied withinthe current case study to explain any industry or corporate reaction, we will now turnour attention to how we collected information from the representatives of the threekey groups involved in this case study (WWF, MCA, and signatory companies).

Research DesignThere are three main components to this case study. The first is the WWF and theirScorecard, and the influence which they are attempting to exert upon both the MCA,which is responsible for the development and revision of the Code, and upon theindividual minerals companies which are the subjects of the Scorecard. The secondcomponent is the MCA, and whether they perceive that they will be influenced by theWWF's Scorecard. Finally, the third component is the individual minerals companieswhich are the subjects of the WWF's Scorecard, and whether members of theseorganisations consider that they will be influenced by the Scorecard.

An interview instrument was utilised in order to gather data from the key participantsin the case study regarding their interactions and perceptions. Interviews wereconducted by telephone, tape recorded with the consent of interviewees, andtranscribed for analysis purposes. Transcriptions were carefully checked against thetape recordings and corrections made where necessary.

Interviews were used in this study as we sought to gain an insight into why WWFundertook the actions it did and how the MCA and individual minerals companiesreacted to the WWF actions. We believe the best way to gather this information is toask the relevant people directly, rather than to use other forms of secondary data. Forexample, if we were restrict our analysis to reports being issued by organisationswithin the minerals industry we would arguably get a less complete account of howthe organisations reacted to the efforts of WWF. We focus on trying to understandmeanings and interpretations provided by the small number of subjects, rather thanlooking for any generalisable causality, or fundamental laws. Because semi-structuredinterviews are to be used, and because of the fairly exploratory and interpretive natureof this research, we are able to explore issues in ‘real-time’ during the interviews.That is, interviewees are able to provide additional explanation where they believe itis necessary.

In providing information about what interview subjects have said we have elected toprovide detailed replication of quotes. This ‘richer’ data will, in itself, allow readers to

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consider not only the theoretical explanations we suggest, but also alternativeexplanations (Ferreira and Merchant, 1992). It also helps guard, at least to someextent, against the authors providing their own, potentially biased, perspective of whatinterviewees were saying.

Interviewee SelectionInterviewees were selected from the WWF, the MCA and individual mineralscompanies. The details of these interviewees appears in Appendix Two. With theexception of Michael Rae of the WWF, who could be easily identified as aninterviewee given the significant part he played in the ‘Scorecard process’, all otherinterviewees will be referred to by a coded number, the order of which does notnecessarily reflect the order in which they appear in Appendix Two. Therefore,anonymity of respondents is maintained to as great a degree as possible whilst stillallowing sufficient information to be provided about the respondents.

In order to gather information from the WWF, a semi-structured interview utilisingopen-ended questions was conducted with Michael Rae. Rae was one of threeco-authors of the Scorecard, and is also the Project Leader of Resource Conservationat the Australian office of WWF. The interview questions asked of Rae appear inAppendix Three.

To gather information from the MCA, semi-structured interviews utilising open-endedquestions were conducted with key members of the MCA. These interviewees werechosen on the basis that they are responsible for handling environmental issues in theMCA, and are responsible for the revision of the Code, which was completed in 2000.Therefore, they are ideally positioned to answer questions pertaining to whether theWWF's Scorecard can influence the actions of the MCA, or the content of any revisedCode. Details of the interviewees appear in Appendix Two, and the interviewquestions appear in Appendix Three.

In order to gather information from signatories to the Code, semi-structuredinterviews utilising open-ended questions were carried out with representatives fromsix of the eleven minerals companies. These companies were chosen randomly fromthe 11 minerals companies who had prepared reports pursuant to the requirements ofthe Code. Interviewees within companies were chosen on the basis that they areintimately involved with the environmental practices and reporting of their respectivecompanies, and were therefore well positioned to answer questions pertaining towhether the WWF's Scorecard would influence their activities. It is believed thatinterview responses from six of the eleven minerals companies is sufficientlyrepresentative for the purposes of this study. This is somewhat supported by the factthat there were common themes identified across the responses. Details of theinterviewees appear in Appendix Two, and the interview questions which wereutilised appear in Appendix Three. All interviews were conducted in November 1999.

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In order to analyse the responses of the interviewees, transcripts of the interviewswere examined in order to identify statements and quotes which were relevant tounderstanding whether the WWF is perceived to be exerting influence over theminerals industry through its Scorecard, both in terms of the MCA and individualminerals companies. Major themes across responses were identified by directexamination of interview transcripts.

Given that the approach adopted in this case study is based on a relatively smallnumber of interviews, and given the interpretive and qualitative characteristics of theanalysis to be undertaken, a positivistic, hypothesis-driven approach is not adopted.Rather, interview questions are posed (which in large part are ‘informed’ by thetheoretical discussion provided earlier in this paper) and then we subsequently reflectupon the interviewees’ responses to the questions to see if the apparent influence, orotherwise, of the WWF’s initiative can be explained by the theories previouslydiscussed (legitimacy theory and stakeholder theory).

Interview questions and responsesInterviews provided the means of acquiring relevant information for this study. Inacquiring this information we were particularly interested in finding out:

1. what motivated the MCA to develop the Code in the first place, and whatmotivated companies to thereafter become signatories to it;

2. what motivated WWF to develop the Scorecard;3. the impact the respective parties consider the Scorecard will have on the Code

(in terms of revisions) and the reporting practices of individual companies;4. whether the actions of WWF are perceived as beneficial to the industry, and

whether it might impact the credibility of minerals companies’ environmentalreporting;

5. whether the respective parties consider that the opinions of WWF reflect theopinions of a broader constituency.

Questions directed to WWF representativeIn relation to how WWF believes the results of the Scorecard will influence theminerals corporations, and the industry as a whole, the following questions wereasked.

Question 1(a): Why did the WWF carry out the Scorecard? Why was the Scorecardchosen as the method of lobbying in this instance?From the following statement by Michael Rae it appeared that the WWF was trying toinfluence the MCA, the Code, and subsequently the practices of individual mineralscompanies through the Scorecard:

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For the MCA it [the Scorecard] provided a very good commentary as the MCAwas doing its review of the Code; that was in part what the Scorecard wasdesigned for. We knew that [a review of the Code] was happening this year andwe thought: ‘okay, lets inform our views as to our lobbying efforts on the MCAfor amendments to the Code, as well as clearly signal to the companies and to theMCA itself as to what was going on [with regard to the WWF’s chief criticismsof the Code]’.

As regards the specific reasons why the WWF felt that the Scorecard was required,Rae makes the comment that:

One of the problems that we had with the Code from the outset was … that theCode doesn’t actually require you to do very much at all, the only thing that youare actually required to do by the Code is to produce an environmental reportwithin two years of signing … also, in not setting specific performance standardsthe MCA didn’t set up, or didn’t need to set up any sort of judging panel to seewhether people were actually doing what they said they would be doing.

It would seem that the actions of the WWF in carrying out the Scorecard are bestexplained by a normative stakeholder perspective as outlined by Gray et al.9 That is, itwould appear Rae believes that the MCA and the minerals companies owe a duty (anaccountability) to their stakeholders to disclose relevant environmental information. Itwould appear that the WWF believes the MCA is not adequately discharging its dutyto the public particularly in terms of issues such as external verification ofenvironmental reports. In response, it would appear that the WWF is attempting toencourage companies to address these issues. This is particularly supported by Rae'sfollowing statement where he noted that the WWF said to the MCA:

you're producing these environmental reports, who judges them as to whetherthey're truthful or not because you don't require any form of externalverification? ... and the response, I kid you not, from the MCA person at the timewas 'oh that's your job', and [we said] 'hang on, how the hell are we going tomeasure the environmental and social performance of these companies, as towhether these reports are accurate or not?' ... [so] we had internal discussionswithin WWF as to what we are going to do about this Code, how we wouldreview its effectiveness. And the idea that came up was [to] publish a scorecardto work out what we thought about the quality of the reports that were comingout ... what we were trying to do was to be able to judge the quality of thematerial in the report rather than just as a tick in a box that yes they had certaincomponents there.

Therefore, it would appear that the WWF carried out the Scorecard particularly inresponse to perceived deficiencies in the Code (such as the fact that the Code does not 9 This can be contrasted with a positive, managerial perspective of Stakeholder theory which might beused to explain the actions of the MCA and the minerals companies (as we will see later in this paper).

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require external verification of environmental reports). Further, by going through theprocess of the Scorecard the WWF had an ‘informed basis’ for highlighting perceiveddeficiencies in the reports which in turn the WWF hoped the minerals industry wouldthereafter address.

Question 1 (b): What impacts do you believe you will have through the Scorecard inrelation to the Code, as well as the practices on the Industry, the MCA, andindividual companies? Do you have any specific examples?In relation to what impacts, if any, the WWF believe the Scorecard will have upon theCode for Environmental Management, the MCA, and the practices of mineralscorporations, Rae appeared generally of the view that the Scorecard would have agreater impact upon the practices of individual companies, than on the content of theCode:

The impact on the Code's moot I suppose, the thing that we really pointed outstrongly in the Scorecard was how little effort was being made on communityconsultation and ... external verification to the reports ... the Code debatecontinues, they've just put out their first iteration of the redraft and there havebeen some changes, but really we're not seeing revolutionary change in the Code.

Meanwhile, regarding the Scorecard's influence over individual companies Raepointed out that:

The individual company response was quite interesting in that we got calls fromnearly every one of the eleven [companies] asking us about the report and howwe've scored them, why we scored them the way we did, how they could improveto get a better score.

It is of particular interest that the individual companies have questioned the WWF asto how they can improve their score. It would appear from this that companies doconsider the views of the WWF. From Rae’s perspective the Scorecard can influencethe activities of corporations since they are interested in how to improve their score,which would possibly mean changes in reporting practices, at the least.

Overall, the WWF is not convinced the Scorecard will have a great impact upon theCode. However, on an individual company level, it would appear that the WWFconsiders that it has influenced a number of companies through the Scorecard,particularly as companies have contacted the WWF with enquiries as to how theWWF scored them, and how they could improve their scores in future Scorecards.

To explore the broad issue of the role that the WWF sees the Code having in relationto environmental performance and associated reporting, the following interviewquestion was asked:

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Question 1(c): Does the WWF believe that the Code for EnvironmentalManagement can adequately fulfil its purposes of ensuring good environmentalperformance and transparency? If not, what does the WWF believe is required?To the question of whether the Code is adequately fulfilling its purposes of ensuringgood environmental performance and transparency, Rae responded:

Probably, not to all of them at this stage in our thinking.

As to what the WWF believes would be required, Rae offered the followingalternative:

We have had a great deal to do with the development of two institutions: theForest Stewardship Council and the Marine Stewardship Council. These twobodies are membership organisations with NGOs and business ... timber traders,fisheries companies et cetera make up the membership. These bodies haveestablished an independent system of performance certification.

Rae cited the instance of the Forest Stewardship Council (FSC) where in November of1999 a system of FSC labels was introduced to timber to enable the purchaser to tracethe product back to the forest from which the wood was first harvested, to see whetherthe product comes from a well managed forest. Rae noted that:

We think that approach is going to be better than any notional code.

Rae went on to say that:

...we've commenced with Placer a project to look at the applicability of thisindependent certification model to mining and at the moment we don't know if itwill necessarily translate to the full gamut of operations ... what we’re looking atprimarily in this mining certification project is the actual certification of whatgoes on in the ground, in the actual digging activity. The metals market is suchthat we can't work out at this stage whether or not we'll be able to do a chain ofcustody.

In relation to the WWF's overall opinion of the Code, Rae noted that:

...that’s not to say the Code's a disaster, it's just not going to be sufficient in itsown right to actually ... ensure better environmental performance. Chances are,the environmental performance of the mining company will improve if they dothe things that are said in the Code, but whether they improve enough to gaincommunity sanction to promote or safeguard the licence to operate of thatcompany, or as it's increasingly being described, the licence to grow, for thatcompany is really moot. I don't think it will come close to that, particularly in thecurrent form where it really requires very, very little of companies other than sign

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up to a few motherhood comments with no ability to check whether they'readhering to them or not.10

Therefore the WWF does not appear to be convinced that the Code is adequatelyfulfilling its purposes of ensuring good environmental performance and ensuringtransparency by corporations. There is a view that other forms of certification mightalso be usefully employed.

To explore whether the views of the WWF are, from WWF’s perspective, reflective ofthe views of the broader society, the following question was asked:

Question 1(d): Do you believe that you, as an officer of WWF, represent the generalviews of society?In response to this question, Rae commented:

I think it’s hard just to make that claim, certainly there a lot of people in societyboth here in Australia and elsewhere around the world who are concerned aboutthe environmental and social impacts of mining and want to see the industry moveas quickly as possible to being an industry that contributes to sustainabledevelopment, and yes we speak for that constituency but there are a whole host ofothers who do also.

The above response does show that Rae considers that WWF does speak for a certain“constituency”, but it is also recognised that there are also other ‘voices’ in the debate.

Questions directed to MCA representativesThis set of questions relates to development of the Code by the MCA, and whether therepresentatives of the MCA believe the WWF’s Scorecard can have any influenceover the content of the Code, or the actions of the MCA.

Previous studies have examined the determinants behind the development ofcorporate environmental policies (Tilt, 1997) and behind corporate social andenvironmental disclosures (Guthrie and Parker 1990; Patten 1992; Roberts 1992;Deegan and Gordon 1996; Neu at al. 1998; Brown and Deegan 1998; O’Donovan1999). Using the following questions the current study extends the research toexamine determinants of the development of voluntarily produced industry codes ofenvironmental conduct, such as the Code produced by the MCA.

Question 2(a): For what reasons did the MCA develop the Code for EnvironmentalManagement?

10 This reference to ‘license to operate’ is interesting. Arguably, it is consistent with the ‘social contract’which is often referred to by researchers adopting a legitimacy theory perspective.

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From the responses of several of the interviewees it would appear that the push for theCode came from outside the industry, specifically from non-government organisationsas well as from the Federal Government. Typical responses consisted of:

I guess to be frank, it [the Code] was developed to try and stop somebody elsedeveloping it. Interviewee No. 1.

It was really developed in response to, I guess at the time, general concern aboutthe performance of Australian mining companies overseas primarily but alsowithin Australia, because we'd had things like Ok Tedi, the North Parks bird kill.I think there was a tailings spill as well, so just general concern and a recognitionfrom the Minerals Council that those concerns were probably at least in partlegitimate, and that the industry did need to improve its approach toenvironmental management, and the Code was a response to that. Interviewee No.2.

More specifically, one respondent noted that:

The ACF [Australian Conservation Fund] put out some years ago, 1994-95 ... adocument entitled Principles for Australian Companies Operating Offshore, andthat set the ball rolling, and also the Federal Government started looking atsimilar issues, and then I guess finally ... the environmental problems at Ok Tediwere beginning to surface, and it was at that stage that the Minerals Councildecided to be proactive and perhaps consider the possibility of forming a code forenvironmental management. Interviewee No. 3.

This is supported by another respondent:

The ACF had specifically developed its own code and that had quite a bit ofsupport from a number of other NGOs [non-government organisations] and theywere putting pressure on the Federal Government to do something, and there wassome murmurings that the Federal Government might do something, so really Iguess from that perspective it forced the Minerals Council’s hand. IntervieweeNo. 1.

Therefore, it would appear that there is a perception that the Code was formed, at leastin part, in response to calls for the development of a Code by the ACF, and thepossibility of the Federal Government imposing some form of regulation over theenvironmental practices of the industry. It was also a response to problems which theindustry was having with regard to environmental issues like those at Ok Tedi (whicharguably were damaging the perceived legitimacy of the industry).11

11 Briefly, reference to Ok Tedi refers to the ongoing operations, to which BHP Ltd was associated,which caused significant environmental damage to rivers within Papua New Guinea over many yearsdue to releases from tailings dams associated with mining activities. The damage received muchadverse publicity within Australia, and elsewhere, over a number of years.

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As noted previously, although a number of studies have examined influences uponcorporate social and environmental practices, only a few have considered theinfluence of pressure groups, and particularly environmental lobby groups. Questions2(b), 2(c) and 2(d) below extend the prior research by examining the perceivedinfluence of an environmental lobby group upon an industry body, and an industrycode of conduct.

Question 2(b): Does the MCA consider that the WWF and/or the Scorecard canhave a significant impact upon the Code for Environmental Management? Will theMCA be reviewing the contents of the Code, or carrying out any other actions, inresponse to the WWF and/or the Scorecard?Some members of the MCA appeared to be of the view that the impacts of theScorecard would be greater in terms of the individual companies rather than upon theCode itself, a view consistent with the expectations of the WWF. However, there wassome belief from other MCA representatives that there would be an impact on theCode as a result of WWF’s Scorecard. Responses included:

I'm not sure that the Minerals Council will do anything necessarily in response tothe Scorecard itself, but certainly, the members of the Minerals Council and thesignatories to the Code will be able to use that Scorecard to help them developbetter reports, so where they performed poorly, if they agree with the Scorecardthey can take steps to address those deficiencies ... the Minerals Council itselfmay use the Scorecard as a bit of a guide providing general advice back tosignatories. Interviewee No. 2.

I don't know personally whether the Scorecard itself will influence muchparticularly in our taskforce. I think it’s more for a company, for them to take onboard his [Michael Rae's] comments and then look at their reporting... because hegoes into quite a lot of detail for each company ... I think it’s more of a companydecision to take on board though. Interviewee No. 5.

Despite this, other respondents noted that there would be (and have been) someimpacts upon the Code arising from the WWF's Scorecard:

Certainly the WWF is considered an important stakeholder, their views havebeen taken on board in the way that the Code Taskforce this year has undergonethe review of the Code ... one of the proposals in that is to establish an externalenvironmental advisory group which would comprise people from a number ofdifferent areas including environmental NGOs such as WWF ... the purpose ofthat would be to engage in a closer way with the community and ... other sectorssuch as government, so the industry can develop a better understanding of whatoutside perceptions are of its performance and how it should manage itsenvironmental responsibilities. So I would argue that WWF's views have beentaken on board in that process and would have been one of the inputs that wouldhave led to the way the Code’s been redrafted. Interviewee No. 3.

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Another respondent also thought that the Scorecard could have an impact upon theCode:

Yes I think it can and I think it has already actually, in that it provides a differentperspective on what might be considered acceptable or reasonable in terms ofreporting for signatories under the Code. And obviously it’s [the Scorecard]identified deficiencies both in the reporting and in the Code and I guess thespecific example there is in the ... principle of community partnership where Ithink everyone scored pretty poorly and yet that's a fundamental aspect of theCode. So in revisions to the Code we've certainly tried to address that and makethe commitment somewhat clearer about what that principle means and theexpectation of delivering against that principle. Interviewee No. 1.

Therefore in the Code Review Taskforce of which the above respondent is a member,it would appear that the Scorecard has been able to impact how the communitypartnership principle of the Code is being addressed in the revision of the Code. Thesame respondent went on to note that:

To me the other key thing that came out of the Scorecard was the externalverification deficiency that was identified and I guess we've been giving a lot ofthought to how the Code should address that in the future, and I guess there's twoaspects to that. One is verification of what a company is doing in its report, butsecondly, verification of a signatory's progress against the Code and we've tried to,in the best way possible, address that in the revisions to the Code by ... first of allrecognising that perhaps we need to report more collectively on the industryperformance against the Code, and we need to survey, or have companies providean assessment of how they are progressing against the Code which can then beconsolidated up to provide an overall assessment [that] obviously needs some sortof verification. So it’s now being looked at a couple of levels. Interviewee No. 1.

It therefore appears that the Scorecard may actually have some impacts upon therevisions of the Code in that the Code Review Taskforce appears to be trying toaddress the WWF's two main criticisms of the Code raised in the Scorecard, namelycommunity partnership, and external verification. It could therefore be argued that ifanything, the WWF has slightly underestimated the impact the Scorecard will haveupon subsequent versions of the Code.12

Question 2(c): Does the MCA consider WWF's involvement through the Scorecardto be costly or beneficial to the industry?Overall, it appears that those within the MCA are of the view that the involvement ofthe WWF has been a net benefit to the Australian minerals industry. Typical responsesincluded:

12 As we will briefly discuss in an Appendix to this paper, the revised version of the Code, released inFebruary 2000, does appear to have strengthened the requirements pertaining to community partnershipand verification.

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I think WWF have had a significant influence particularly on our company but Ialso think more generally on the industry of driving change and because they aresomewhat pragmatic and prepared to engage with the industry and directly withcompanies, is that they've proved to be fairly effective in influencing the directionof companies and industry and the need for change. Interviewee No. 1.

I think it’s a positive. Getting back to the points that we were making earlierabout preparing to have a dialogue which is actually constructive, I mean theremay be areas where the industry and WWF will never agree but WWF is anorganisation that is prepared to sit around a table and talk those issues through.Some other organisations are less inclined to do that, aren't even prepared tocome to the table to some extent. So I think the industry, in my sense andcertainly the Code taskforce has seen that as a positive development. I think theformation in the new Code of the external environmental advisory group isanother extension of that, that the industry is quite genuine about wanting to getcloser to what community attitudes and perceptions are. Not with a viewnecessarily to guarantee to take them all on board, but the first step is always tounderstand what the concerns are out there. So I think on balance they would seeit as a positive. Interviewee No. 3.

Really it’s a benefit to us because we’re getting an organisation that's putting areasonable amount of effort into evaluating our reports and getting what I think isvery useful feedback so I take that as a net benefit. Interviewee No. 2.

The MCA appears to view the involvement of the WWF as a net benefit, as nointerviewees mentioned any costs to the industry of having the WWF involved. Thisadds weight to the conclusions reached above that the WWF can influence the MCAand the Code both through the Scorecard and through other means, since it wouldappear that the MCA is willing to have discussions with an organisation which arepragmatic and constructive in its approach to lobbying.

Question 2(d): Do you, as a representative of the MCA, believe that the concerns ofWWF represent the concerns of the broader community?Whilst the answers were somewhat mixed, the majority view (three out of five)seemed to be that WWF’s views did reflect those of the broader community. This initself could possibly explain why the MCA is likely to listen to WWF’s concerns.Comments included:

That’s a good question. I guess in a generic sense, yes, I feel that they tend to befairly pragmatic, and their views are that certainly we need progress and societyneeds a lot of the products and consumables that we buy, but at the same time weneed to solve some of the major environmental issues that are confronting theglobe and perhaps us more locally, and from that perspective they want to try anddo something about it, and I think from a broad perspective, that’s probably nottoo different to the average urbanite. Interviewee No. 1.

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Yes, well I think it’s one of the more moderate of the NGO’s, particularly I was atthe Townsville workshop last week where Michael Rae gave a presentation abouthis views for the future, and compared to at least one of the others who was therehis was a much more moderate voice and I think the WWF is seen because it’sfamiliar ... a lot of people know about that organisation, it’s seen by thecommunity, whoever they are out there, as a genuine representative. IntervieweeNo. 5.

I think, probably more so than some other organisations which tend to be a littlebit more extreme. Interviewee No. 2.

Questions directed to representatives of signatory companiesSet three of the questions concern the minerals corporations which were the subjectsof the WWF's Scorecard. It has so far been found that the WWF has attempted toexert an influence over the MCA and individual minerals companies by way of theScorecard, and that representatives of the MCA have cited the WWF as a source ofinfluence over the Code. This final set of questions aims to discover whether theWWF and the Scorecard can have an influence upon individual companies. Interviewswere conducted with key personnel from six of the eleven corporations. As indicatedearlier, details of the interviewees appears in Appendix Two and the interviewquestions are contained in Appendix Three.

Question 3(a): Why did your company originally become a signatory to the Code forEnvironmental Management?It would appear that many companies were keen to see the introduction of the Code.As to why this was the case, it appeared that most companies signed up to the Codebecause they perceived that there were pressures from communities, NGOs and thegovernment to develop a Code, and for companies to commit to it. The followingcomments are reflective of this:

I guess we believed it was imperative for the industry and we should provide someleadership by being one of the initial groups to commit to it. I guess [we providedleadership] because we felt the industry was struggling. I guess we felt that theindustry did need to acknowledge that its performance wasn't the best and that itneeded to commit to continual improvement and to address some of the growingexpectations of the broader community. Interviewee No. 7.

The reason fundamentally was that non-government organisations were pushing forthe development of a code of practice because of their concerns about operationslike Ok Tedi. We recognised that that was not an unreasonable request andaccordingly took a lead in helping to make it happen. Interviewee No. 6.

At the time we thought there was a real need to respond to expectations that wereout there both in government and in the broader community and the NGOcommunity to stand up and say as an industry, not what we’re actually doing ascompanies, but to actually say as an industry: ‘here are some things we

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fundamentally believe and this is our approach to environmental management’ ...and I think there was a need to articulate for external audiences just how we doapproach environmental management. Interviewee No. 9.

Another respondent also noted the importance of the entire industry being seen to havegood environmental performance:

We became a signatory mainly because it’s absolutely vital that the whole miningindustry has a high standard of environmental performance and the Code providesus with one vehicle to encourage that - if one company does badly, it brings the restof us down. Interviewee No. 11.

Therefore, it may be concluded that the main impetus for becoming a signatory to theCode is because of pressure which was, or could be exerted by the community, NGOsand the government for the development of a code relating to environmentalperformance. This is consistent with the conclusion arrived at earlier that the Code wasoriginally introduced because of pressure from lobby groups (in particular the ACF),government, and the general community. It would appear that companies recognisedthis and many took the opportunity to become identified with the Code (perhaps asymbol of legitimacy) from an early point.

Questions 3(b) and 3(c) below build upon the results of Tilt (1997), which examinedwhether corporations consider that pressure groups can have an influence upon theircorporate environmental policies. The questions also build upon the numerous studieswhich have examined the determinants of corporate social practices in general.

Question 3(b): What influence, if any, does your corporation believe the WWF’sScorecard can have upon its reporting practices? Do you believe the Scorecard canaffect the credibility of your environmental reports?Most companies appeared to view the WWF's Scorecard as constructive criticism andappeared ready to act upon those criticisms. Generally, most companies said it wouldinfluence them.

The Scorecard is useful because it gives us feedback from WWF's perspective onwhat our reporting looks like ... what feedback can do is to help us report in amore fulsome way perhaps, or more fully ... certainly I read with very muchinterest what WWF put together and I will take that into account as I will all otherfeedback I receive and will try to include any good examples from the feedback inthe next report. Interviewee No. 11.

I think it will certainly change how we report in the future because you'reimmediately thrown into a competitive and comparative analysis and that providesa tool that management can use internally to say 'well hey, why is it that someother companies’ reports appear to be meeting the needs of the WWF more thanours? Where have we done things differently? Where have we fallen down in

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some cases? ... Why is it that were not being able to convey the same sort ofinformation that our competitors are doing?' Interviewee No. 9.

We looked at it as a constructive document that we could look at areas where he[Michael Rae, one of the authors of the Scorecard] had perceived we hadweaknesses in our reporting. Interviewee No. 10.

Yeah look we certainly will [in response to the question: will you change yourreporting practices in response to the Scorecard?]. We've reviewed the Scorecardpretty carefully and believe that it provides quite a useful base for reviewingreports but there are a number of other reporting guidelines as well that we takeinto account. Interviewee No. 6.

I think the Scorecard has an impact upon the way we’re thinking about thebusiness, and perhaps how we need to report in the future. Interviewee No. 7.

In terms of specific examples of where companies would change, most companiesreferred to the fact that the WWF had marked them lowly in the areas of communityconsultation and external verification, and that they would look at trying to improvetheir scores in these areas. For example:

There were certain areas that we scored very low in ... for example the communityconsultation was the main area we scored particularly low and that's interesting tome because what we need to do is to be able to report our community consultationissues much better so we need to improve that reporting level, and that may wellstimulate better systems for reporting on those issues within the company.Interviewee No. 11.

There are a couple of areas where we were scored [poorly] and we sought furtherexchanges with WWF to try and see what they were driving at. Particularly the areaof third party verification. The process that we had employed was an externalverification firm ... we didn't score highly on that compared with some of the othercompanies and we think it’s because there's been a misunderstanding by WWF asto what [the external verification firm] has done ... we’re also looking at what morewe can do in that area ... we know it’s an area (because WWF keep telling us) thatranks highly in their scoring ... so that's a need that we obviously will need torespond to. Interviewee No. 9.

We lost points because we didn't have targets in there which we've now addressedin this year’s report, we lost points because we didn't have a lot of discussion onimplementations of policy and EMS [Environmental Management Systems]development, but we've added a fair bit more on this year ... we lost points becausewe didn't have a group-wide community policy, and we still don't have one so thatwould have to be a decision made sort of high up. Interviewee No. 10.

In relation to whether companies believed the Scorecard could affect the credibility oftheir reporting, most company representatives believed it could. For example:

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Oh absolutely I would think so. WWF has said it’s not going out of its way topublicise the results but of course the results are publicly known and available ...and if we’re going to keep our reputation for excellence in environmentalmanagement and now this new dimension of environmental management, thereporting dimension ... that if we’re scored down, or not being seen to do ourreporting as well as some other groups for whatever reason, then that concerns us.Interviewee No. 9.

Yes, certainly it can. It’s identified what it sees to be a benchmark and I guess itprovides you a way of measuring yourself against the benchmark, and if you cando that then obviously your credibility of the report must change. Interviewee No.7.

We scored quite highly on the Scorecard and I would expect that readers [of theenvironmental report] who believe in WWF's own credibility would regard thatwell and they'd also see that there's areas we need to improve on and next yearhopefully if we've improved on those and the Scorecard reflects that people willunderstand that and we will hopefully get some credibility from that. IntervieweeNo. 11.

Overall, in response to this question, it would appear that minerals corporations dobelieve that the Scorecard can have an effect upon their operations, and that it canaffect the credibility of their reporting. In particular, companies generally noted thatthey would examine how they can improve their reporting in terms of providinginformation about external verification of environmental reports, as well as reportingon community partnerships.

Question 3 (c): Will your corporation disclose the results of the WWF’sScorecard in its environmental reports, or in some other form of disclosure?Most companies generally said that they would disclose the results of the Scorecard.

Well we already have in that we've been telling people how we went ... in contactwith groups or where we have meetings with external stakeholders we normally tellthem where we’re up to ... and refer to drivers like the Scorecard and how we went.Interviewee No. 7.

We are actively looking at that in the next report ... space permitting we will indeedreport if we can do it in a succinct fashion, all of the meaningful bits of feedback[both positive and negative]. We’re going to put them in we think without our owncommentary. Interviewee No. 9.

Yes, I think that's a great idea, but again, like I'll describe any other positive ornegative feedback we've received. But certainly the Scorecard is the mostcomprehensive feedback we've received this year. Interviewee No. 11.

At the same time, one corporation commented in the negative:

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We scored quite well under the WWF Scorecard, but have chosen not to publicisethat in our report this year ... I think if WWF want to publicise the Scorecard that'sup to them I don't think it’s our role to publicise their Scorecard. Interviewee No. 6.

Despite this one comment, corporations appeared prepared to disclose the results of theScorecard in one way or another. This lends support to the notion that mineralscorporations believe the Scorecard to be an important piece of feedback, and appear tohave the impression that the views of the WWF can affect how external parties viewtheir company. Further, there is a general view that it reflects positively on a companyif that company shows that it will respond to the concerns of a group like WWF.

Consistent with the question asked of the representatives of the MCA, the followingquestion was also asked of the representatives of the respective companies:

Question 3(d): Do you, as a representative of your minerals corporation, believethat the concerns of WWF represent the concerns of the broader community?Again, it would be reasonable to argue that the minerals corporations are more likelyto respond to the concerns of WWF if those concerns are also perceived to representthe concerns of the broader community.

In reviewing the responses, five of the six minerals corporation representativesconsider that the views of the WWF do represent the views of the broader community.The following comments are reflective of this view:

Yes I think they probably are … I think they reflect the broad concern and interestthat there is in environmental ... well conserving pristine environments and bio-diversity in particular, and they’re down the sort of nature conservacy end whicheverybody fundamentally believes in … we pay attention to groups that arerepresentative of, as I say, civil societies that, particularly those who lead opinion,right so it’s not just any community based group but it’s those groups thatinfluence politicians, influence outcomes, influence our reputation, that take anintelligent interest in our business as well, and WWF does and they’ve got quitean expertise in mining issues. So you’re actually having a dialogue of people whoare saying things that you need to hear, they’re not just critical of you from somephilosophical or ideological position, they’re actually saying hey, there’s someissue here that from our perspective we think you need to deal with. So we do takethat seriously and if we didn’t they would be quite right in being out there publiclybeing more critical of us. Interviewee No. 9.

Because they represent an interest group in society with generally strong opinionsabout environmental performance, and good feedback is always important for usto have if we’re going to improve our own performance. Interviewee No. 11.

Discussion of interviewee responses

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Having considered the responses of the various interviewees we will now attempt toexplain the respective positions by applying the theoretical perspectives brieflyoutlined earlier in the paper.

In considering the responses to the questions included in Set 1 (which were directed atMichael Rae of WWF) it would seem that the WWF Scorecard was driven by a viewthat minerals companies were not demonstrating sufficient accountability from theperspective of WWF. The WWF took its action of developing the Scorecard because ithoped to point out deficiencies that would later be addressed. In terms of whatpotentially motivated WWF, it would appear from the evidence that WWF wasmotivated by the broader interests of the community, and of the environment.

Consistent with the views provided by legitimacy theory and stakeholder theory itwould also seem that WWF believed that their actions would influence the reportingbehaviour of the minerals industry. The views of the WWF, which arguably wouldrepresent the views of its constituency (particularly those “concerned about the socialand environmental impacts of mining”, as Rae notes), cannot be ignored if an entity orindustry wants to maintain its ‘license to operate’. Further, as an organisation withlarge membership and expertise in lobbying government, the WWF could beconsidered to be a ‘powerful’ stakeholder group with the ability and resources toinfluence the operations of mining companies. The evidence does indeed suggest thatthe minerals industry did react to WWF’s efforts.

In considering the responses to the questions included in Set 2 (the respondentscoming from the MCA), it could be construed that the industry’s reaction to WWF’sinitiative was an act of legitimation. That is, the minerals industry is attempting tocommunicate to the WWF, as well as any other ‘relevant publics’, that it is changingits environmental activities in response to the concerns of the WWF. In this way, itcould be argued that the industry is attempting to legitimate its activities by Lindblom's(1994) first method of legitimation - seek to educate and inform the relevant publicsabout actual changes in industry behaviour. In the absence of considering the views ofWWF, which arguably represent a significant section of ‘relevant publics’, theindustry's legitimacy may come under threat and the ‘relevant publics’ may ‘revoke’the industry's ‘licence to operate’. It could be argued that the development of the Codewas a means by which the minerals industry could demonstrate to ‘relevant publics’such as lobby groups, government and the general community that their concernswould be recognised and the industry was taking steps to improve its environmentalperformance and thus maintain legitimacy. It could also be argued that the MCA wasattempting to deflect attention from the issues of concern such as those at Ok Tedi, tothe related issue of introducing a Code for environmental management. This isconsistent with Lindblom's third approach to legitimation.

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As regards a stakeholder perspective it could be argued that the minerals industryconsiders the WWF an important stakeholder that can influence their activities, and istherefore acting upon the issues which the WWF raises. The industry is thereforeattempting to maintain the support of the WWF and those stakeholders whoseperceptions the industry believes the WWF might influence. It could be argued that ifthe minerals industry is not meeting the demands of key stakeholders such as theWWF and other lobby groups, the community and government, they may withdrawtheir support for the company. This view is supported by various responses whichindicated that the Code was formed in response to pressure from these groups.

From a political economy perspective, it could be argued that the industry allows theWWF to influence it in order to demonstrate to groups such as lobby groups, thecommunity and government that their concerns are being met in order to avoid thepossibility of regulation being imposed upon their environmental activities from asource external to the industry. It could be argued that the industry could have been indanger of having a form of 'code of conduct' imposed upon it from an external sourcesuch as government or lobby groups, if those groups do not perceive that the industryis meeting their demands with regard to environmental performance.

In relation to the third set of questions (those addressed to personnel from particularmining companies) legitimacy theory offers an explanation of corporate behaviour inthis instance. It could be argued that corporations were attempting to deflect attentionfrom issues such as Ok Tedi to the related issue of voluntarily signing to a Code forenvironmental practice, which is consistent with Lindblom's third method oflegitimation. The companies might also have been responding to pressure which was, orcould be exerted by the community, NGOs and the government for the development of acode relating to environmental performance.

Consistent with legitimacy theory it could also be argued that corporations areattempting to demonstrate to the WWF as well as to other NGOs, communities andgovernment, that their environmental activities will change in response to theScorecard. That is, corporations may view the Scorecard as a threat to the legitimacy oftheir operation, and are thus attempting to legitimise their activities by way ofLindblom's first method of legitimation - educating and informing relevant publicsabout actual changes to their behaviour in response to the WWF’s concerns.

It could be argued that from a stakeholder perspective, individual companies signed tothe Code to address the concerns of stakeholders such as lobby groups and government- stakeholders which companies might have perceived as potentially quite powerful.From a stakeholder perspective corporations believed that the Code was a way inwhich they could demonstrate that they were improving their environmentalperformance and accountability, which would in turn help to ensure that corporationsreceive the support of the key stakeholders necessary for their existence.

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Finally, the wider political economy perspective also offers an explanation. It could beargued that companies were signing to the Code in order to pacify the demands oflobby groups, communities and government, and to demonstrate that the industry wasserious about improving its environmental performance. This would assist in ensuringthat government does not impose additional legislation upon minerals companies withregard to their environmental performance. At the same time, companies couldpotentially gain support on an individual basis from lobby groups such as the ACF, thecommunity and government.

Concluding commentsReflecting upon the comments made by the participants in this study it does at leastappear that the MCA and the minerals companies are prepared to alter their behaviourtowards conforming with the expectations of the WWF, and therefore, the expectationsof many individuals within society (if we accept that the WWF’s views are reflectiveof broader community concerns, which appears to be the perspective of the majority ofinterviewees from the minerals industry). There was a general view held by therepresentatives of the MCA and the minerals companies that the success of theindustry is dependent upon considering the views and expectations of the community(represented by the notion of the ‘license to operate’, or ‘social contract’), and it wasaccepted there was a deal of concern about the industry’s environmental performancewhich needed to be addressed through initiatives such as the Code, and throughassociated disclosures.

The responses provided by the interviewees also seem to emphasise the importance ofgroups such as WWF in terms of monitoring corporate activities, and in suggestingimprovements. Without the direct and co-ordinated actions of specialist interestgroups, such as WWF, corporations and industry might not be aware of particularconcerns, and might therefore, not react.

We can look at the apparent responsiveness of the minerals industry in a number ofways. One less than optimistic view would be consistent with the views of Cooper andSherer (1984). They argue that legitimising activities (such as changes in corporatedisclosures, or perhaps the introduction or amendment of Codes of Conduct) simplyact to sustain corporate operations which are of concern to some individuals withinsociety, and sustaining such operations will simply benefit the interests of theexecutives of the organisations, as well as the owners of the capital. To the extent thatthe legitimising strategies (such as changing reporting practices, or amending Codesof Conduct) reflect or portray management concern as well as corporate and industrymoves towards actual change, the corporate legitimising strategies may be merelyforestalling any real changes in corporate behaviour. In fact, some researchers seelegitimising behaviour as potentially quite harmful, particularly if it legitimises

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activities that are not in the interests of particular groups within society. For example,Puxty (1991, p. 39) states:

I do not accept that I see legitimation as innocuous. It seems to me that thelegitimation can be very harmful indeed, insofar as it acts as a barrier toenlightenment and hence progress.

Following the above line of argument it could also be argued that reactions to theconcerns of groups such as WWF cannot be construed as representing any acceptanceof responsibilities, rather it is tied directly to survival. If a concern is not raised, thenno responsibility is deemed to be due.

Reflecting the personal biases that affect how we view particular data, we, the authors,have, however, chosen to view the interviewees’ responses in a more optimistic way.The corporations and industry which are the subject of this study appear to havereacted to the concerns of the community, as represented by WWF. Certainly, theresponses of the interviewees consistently indicated a willingness to respond to theconcerns. As long as groups such as WWF (with staff who arguably are motivated bythe ‘public good’) continue to scrutinise the activities of various organisations, and aslong as industry are prepared to ‘listen’ to these concerns (and we believe from theevidence that the minerals industry did listen in this case) then hopefullyimprovements in the social and environmental practices of many business will result.The importance of interest groups such as WWF to the process of change appearscentral.

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Dowling, J. and Pfeffer, J. 1975, "Organizational legitimacy: Social values and organizationalbehaviour", Pacific Sociological Review, Vol. 18, No. 1, pp. 122-136.

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APPENDIX ONENINE KEY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY

CODE FOR ENVIRONMENTAL MANAGEMENT• sustainable development - managing activities in a manner consistent with the

principles of sustainable development;• environmentally responsible culture - to be developed through management

commitment, management systems and educating and training employees andcontractors;

• community partnership - consulting the community on its concerns;• risk management - apply risk management on a site-specific basis to achieve

desirable environmental outcomes;• integrated environmental management - recognising environmental

management as a corporate priority, and integrating it into all operations;• performance targets - set targets not necessarily limited to legislation, licence

and permit requirements;• continual improvement - implement management strategies to meet current and

anticipated performance standards, and review objectives in light of changingexpectations;

• rehabilitation and decommissioning - ensure decommissioned sites arerehabilitated and left in a safe and stable condition; and

• reporting - report on the company's implementation of the Code andenvironmental performance to governments, community and within thecompany.

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APPENDIX TWOInterviewee DetailsRepresentative from World Wide Fund for NatureName PositionMichael Rae Project Leader, Resource Conservation

Co-author Environmental Reporting Scorecard

Representative (5) from Minerals Council of Australia - Interviewees 1 through 5Position with MCA• Senior Policy Adviser - Environment• Code Review Co-ordinator• Chair, Code Policy Taskforce and Member, Environment Committee• Member, Code Policy Taskforce and Member, Environment Committee• Member, Code Policy Taskforce and Member, Environment Committee

Representatives from six Individual Minerals Companies - Interviewees 6through 11Company PositionBHP Manager, Environmental and Community AffairsMichelago Exploration ManagerMIM Senior Environmental AdviserPlacer Dome. Vice President, Sustainability Leadership, Asia PacificRioTinto General Manager - Environmental PolicyWMC Project Manager - Environmental Reporting

Note: as indicated within the text, to maintain anonymity interviewee labels 1through 11 do not necessarily apply in the order in which the interviewees appearin this appendix.

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APPENDIX THREEInterview Questions

Interview Questions Set 1, for representative of WWF1(a). Why did the WWF carry out the Scorecard? Why was the Scorecard chosen asthe method of lobbying in this instance?1(b). What impacts do you believe you will have through the Scorecard upon the Code,as well as the practices of the industry, the MCA and individual companies? Do youhave any specific examples?1(c). Does the WWF believe that the Code for Environmental Management canadequately fulfil its purposes of ensuring good environmental performance andtransparency? If not, what does the WWF believe is required?1(d). Do you believe that you, as an officer of WWF, represent the general views ofsociety?

Interview Questions Set 2, for MCA representatives2(a). For what reasons did the MCA develop the Code for EnvironmentalManagement?2(b). Does the MCA consider that the WWF and/or the Scorecard can have asignificant impact upon the Code for Environmental Management? Will the MCA bereviewing the contents of the Code, or carrying out any other actions, in response tothe WWF and/or the Scorecard?2(c). Does the MCA consider WWF's involvement through the Scorecard to be costlyor beneficial to the industry?2(d). Do you, as a representative of the MCA, believe that the concerns of WWFrepresent the concerns of the broader community?

Interview Questions Set 3, for representatives from individual mineral companies3(a). Why did your company originally become a signatory to the Code forEnvironmental Management?3(b). What influence, if any, does your corporation believe the WWF’s Scorecard canhave upon its reporting practices? Do you believe the Scorecard can affect thecredibility of your environmental reports?3(c). Will your corporation disclose the results of the WWF’s Scorecard in itsenvironmental reports, or in some other form of disclosure?3(d). Do you, as a representative of your minerals corporation, believe that theconcerns of WWF represent the concerns of the broader community?

Note: More questions, other than those listed above, were asked of the interviewees. Only thosequestions pertaining to the issues addressed in this paper are detailed above.

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APPENDIX FOUR

Postscript: Revision of the Code in February 2000This appendix provides an insight into the changes that occurred in The Code at a timeafter the WWF’s Scorecard had been released. A revised version of the AustralianMinerals Industry Code for Environmental Management was released in February2000. The Code is now made up of seven key principles (as opposed to nine as in theoriginal Code). It would appear that WWF’s concerns about ‘Community Partnership’issues have been embraced and the Code is now a great deal more explicit aboutinvolving the community13. In the version of the Code released in 1996, the discussionpertaining to the Principle of Community Partnership simply stated:

Consulting the community on its concerns, aspirations and values regardingdevelopment and operational aspects of mining projects, recognising thatthere are links between environmental, economic, social and cultural issues.

In the revised Code released in February 2000, community partnership issues arestressed in a number of places14. For example, under the Principle of ‘Strengtheningour Relationships with the Community’ the following guidance is provided:

Engaging the community about the environmental performance of our operationsby:• Fostering openness and dialogue with employees and the community.• Respecting cultural and heritage values and facilitating cross-cultural

awareness and understanding.• Consulting with the community on the environmental consequences of our

activities.• Anticipating and responding to community concerns, aspirations and values

regarding our activities.

In relation to the Principle of ‘Communicating our Environmental Performance’ theguidance states that it is important to consider different interested parties and theirinformation needs and that the external involvement of stakeholders in monitoring,reviewing and verifying environmental performance should be encouraged. It is also notedthat organisations should also continually review and evaluate the effectiveness of theircommunications. The previous version of the Code was silent on this.

13 Of course, we cannot prove that any changes in the Code are due to WWF’s involvement. Clearly,there would have been other pressures for change. Nevertheless, some of the concerns of WWF havebeen addressed within the revised Code.14 Also, in the Code Implementation Survey, released in 2000, which signatories are required tocomplete annually, it is stated (p. 4) that “industry sustainability, and acceptance by the communityrequires significantly more sharing of information and ‘partnering’ with those who share an interest inwhat we do”.

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In relation to the other major concern of the WWF in relation to verification issues, adetailed process of implementing the Code was established in 2000. All signatories arenow required to complete an annual self-assessment of their implementation of the Code,and this self-assessment is then to be audited by an accredited auditor (accredited by alimited number of bodies, including Quality Society of Australia). There is a very detailedguide (73 pages) to the assessment process (entitled Code Implementation Survey)provided by the MCA15. The MCA also announced in 2000 that it has established anExternal Environmental Advisory Group (EEAG) to review the results of the self-assessments. The EEAG is then to make public releases of information about theindustry’s ongoing implementation of the Code. According to a guidance note released bythe MCA in early 2000, the EEAG:

provides independent advice to the Environment Committee of the MineralsCouncil of Australia. It is a forum through which the minerals industry canconstructively engage on industry environmental and related social issues –with a view to continually improving industry performance – by taking intoaccount community expectations.16

Again, the linkage between ‘community expectations’ and ‘industry performance’ isacknowledged.

15 Each Code Principle is subdivided into Elements and Activities. These are the bullet points undereach Code Principle. A score is to be assigned to implementation of each Element. Scoring is on asimple linear scale from 0 to 5 with each score attributable to a discrete level of implementation. TheStatements and their respective scores are: 0 – no action has occurred; 1 – action planned anddocumented; 2 – systems/process being developed; 3 - systems/process are implemented; 4 –integration into management decisions and business functions; 5 – excellence and leadership.16 Group members will be chosen from a range of different sectors and agencies including, but notlimited to: government; community non-government organisation (NGO); Environmental NGO;Environmental Practitioner; Australian Minerals and Energy Environment Foundation; Aboriginal andTorres Strait Islander Commission; and a member of the Council’s Environment Committee.