How BHP is addressing climate change
The materials BHP provides are central to modern life and the company is constantly evolving its approach to continue to deliver them sustainably into the future.
BHP is tackling climate change
BHP has laid out a comprehensive series of metrics, targets and goals...
"We have committed to holding management to account through a direct linkage of climate-related targets and goals to executive remuneration. And we have affirmed our commitment to advocate for public policy in pursuit of global decarbonisation.
"We will remain alert to technological, political and societal developments that may indicate changes to our signposts and the development of new uncertainties for our portfolio analysis. We will continue to monitor developments and review our approach as necessary, to respond to evolving approaches to climate change and climate-related disclosures."
Fiona Wild, Vice President, Sustainability and Climate Change
Fiona leads the design and implementation of our global climate change strategy, including activities in the areas of mitigation, adaptation, portfolio evaluation, stakeholder engagement and low emissions technology.
BHP's purpose and strategy
"Our iron ore and metallurgical coal create the steel that builds cities and makes renewable energy infrastructure possible; our copper is needed for electrical appliances and wind turbines; our oil powers mobility; our natural gas and energy coal provide energy and heat; and our nickel enables the development of storage solutions for intermittent wind and solar power. And looking to the future, potash has the potential to support more efficient and sustainable agriculture by making crops more productive.
In 2020, BHP published its Climate Change Report 2020, a special publication designed for a more detailed discussion of our approach to identifying and managing climate-related risks and opportunities, which aligns with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. It outlines its successes, learnings and plans for future initiatives.
BHP deliberates ditching fossil fuels for greener mining
The world’s biggest miner, Australian-based BHP, is supposedly considering withdrawing from a multi-billion dollar contract, which would see the company generate more than US$2bn due to mounting pressure over aligning its business with ongoing climate concerns and ESG-compliance measures.
Exiting the agreement would mean BHP escalate its distancing from oil and gas and subsequently cut down on the amount of fossil fuels used by the company when mining.
It’s estimated that the petroleum business being debated upon could actually be worth around US$15bn but is still under talks to be put up for sale.
Global Mining Giant Considers Greener Future
BHP has made itself clear that it wants to avoid becoming unable to sell its assets. As competition within the market increases following higher numbers of oil giants wrestling with investors to deal with climate pressure, so too are the number of mining rivals looking to make environmental changes for the future.
However, BHP currently has the upper hand as a stalwart mining company that established itself back in the 1960s, allowing it the time to grow and dominate over other fast-appearing mining competition.
Mike Henry, BHP Chief Executive, has an optimistic outlook for the future of oil and gas despite worries over rising demand to align his business with the Paris Climate Agreement. Henry argues that prices remain promising due to a lack of industry-wide investment.
BHP’s petroleum business won’t be easy to say goodbye to. Forecasted to generate around 6% of profits during the ongoing financial year (US$2bn), and around US$1.6bn revenue produced by BHP petroleum in the six months leading to December 2020, BHP is due to take a hit no matter what agreement they choose.
On the other hand, distancing itself from thermal coal and petroleum would arguably aid the company’s case to possible - and valuable - investors who may be required to fund BHP’s increased output to places such as Australia and Mexico in the near future.
BHP considers cutting billion-dollar contract to aid climate
An exit away from petroleum has the potential to be “a powerful corporate catalyst,” says Dominic Kane, Analyst at JP Morgan.
“We believe an exit would likely ring-fence BHP’s exceptional cash flows for non-fossil fuel organic growth, mergers and acquisitions and generous shareholder distributions since BHP could avoid a major new capital investment phase this decade in petroleum.”
BHP is also set to sanction a giant US$5.7bn Canadian potash mine in August of this year, already seeing potash as a long-term substitute for gas and oil going into the future. The company has also previously announced plans to abandon its 80% share in its joint endeavour with Mitsui, owner of two lower-quality mines in Queensland, Australia.
BHP is scheduled to report its annual results on August 17, after which it may become clearer on whether the company will choose to focus its shift to a low-carbon economy or whether it will stay with its current contract into the coming year.