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Coal & Allied: A Balanced Reflection

By Samantha Eyre (Net Balance) on July 11, 2011 at 4:31pm.

Context

Coal currently accounts for around 80 per cent of Australia’s electric power, compared to about 30 per cent in the UK. Black coal is also Australia’s biggest commodity export and its contribution to Australia’s GDP more than doubled between 2006 and 2009. However, Australia’s reliance on coal has not been without criticism; and substantial concerns exist about the carbon dioxide emissions associated with burning coal and the environmental impact of mining operations on land and biodiversity.


At the same time, the abundance of this affordable energy source means that it is likely to remain a significant contributor to Australia’s power supply and export market well into the future.

Content

In its Sustainable Development Report 2010, Coal & Allied goes some way to showing how the company is responding to the environmental and social challenges faced by the industry. This is perhaps not surprising given that the company, which operates three mines in New South Wales, has been around for over 150 years and that its majority shareholder is Rio Tinto, the world’s third largest miner by market capitalisation.


The report begins by focusing on the contribution mining and producing coal can make to generations through the “supply of affordable and reliable energy, the provision of employment opportunities and even the rehabilitation of previously degraded land once mining ceases.”  However, the company also highlights the challenges it faces and says that “if not managed, our activities have the ability to detract from sustainable development, such as the use of water and land, amenity impacts on local communities and production of greenhouse gas emissions from our operations and the use of our coal.”


Overall, the report continues in this vein and presents a sound effort at setting out the company’s key challenges and determining sustainability priorities for the company. The report covers many of the company’s key impacts including its approach and performance on land management and figures on land disturbed and rehabilitated, reducing emissions from mining and the use of coal, health and safety, and water use.


While the reader can get a good idea of the company’s key policies and procedures from the report, real-life case studies would help illustrate the company’s approach. For example, the report outlines the company’s position on local communities but there are no case studies on how the company has engaged farmers, neighbouring landholders and other stakeholders in the reporting period. Given that Coal & Allied is one of the largest landholders in the Hunter Valley region of New South Wales this seems like an omission. Inclusion of case studies in this instance would help show how the company is working to understand and respond to stakeholder concerns.


The Managing Director’s message is perhaps too short to get a full understanding of the current and future key risks and opportunities for the business. One may for example have expected to see discussion on a potential carbon price, which is likely to have significant impacts for the business, but this is not discussed.


The company clearly states where it has and has not achieved the targets it set for 2010 and details the results. Targets for 2011 are also outlined in the areas of health, safety and environment, people, and communities and government.  To understand how specific targets were determined, more explanatory text would be helpful. For example, the freshwater use per tonne of product target for 2011 is much greater than the highest reported historical freshwater use (2006) but there is no discussion as to why freshwater use is expected to rise so significantly in 2011.


Ideally, to get a proper understanding of the role that Coal & Allied sees itself playing in the Australian economy and environment over the longer-term, targets for at least the next three to five years would need to be included.

Communication

The company publishes the report as an interactive website and also as a 65-page pdf. The website is easy to navigate and has manageable chunks of information to keep the reader interested. However, the pdf could be improved with the inclusion of graphics and pictures.


This report does not follow GRI reporting guidelines and there is no evidence that a materiality process has been undertaken to identify and prioritise the company’s key issues.


Credibility

Overall, the report is balanced in terms of reporting both its achievements and its challenges. The report includes non-conformances in safety and environment systems and community complaints; and if anything, it may lean too much to the negative side. The victory of the Begalla Mine Rescue Team at the 2010 NSW Mines Rescue competition is hidden away among information on safety performance – this could be presented as a case study highlighting the time and effort the teams put into training and the benefits of the emergency support provided.


There is also balanced communication of performance with the report disclosing when Coal & Allied has failed to achieve the targets it set in 2010. However, the report has not been independently assured.


In terms of responding to stakeholders concerns, it is unclear whether there is a robust system in place. Community complaints about on-site incidents such as noise have been disclosed but the company’s responses to broader stakeholder concerns have not been revealed.  For example, Coal & Allied have a number of development projects underway in NSW but there is no discussion of whether (or how) Coal & Allied are engaging with stakeholders as part of these projects.

Recommendations

1. Disclose the company’s key sustainability issues at the front of the report
2. Set longer-term targets
3. Include an overview of how sustainability governance is structured
4. Use historical data to demonstrate progress over time (where data is available)
5. Consider using case studies to illustrate the company’s policies and approach
6. Conduct a formal stakeholder mapping process to identify the key concerns for each stakeholder group.

Samantha Eyre is a Project Consultant at Net Balance, a sustainability advisory services firm with offices in Melbourne, Sydney, Brisbane and London. www.netbalance.com