BHP pledges $400M in climate change investment

Source: By David Stringer and Thomas Biesheuvel, Bloomberg • Posted: Monday, July 29, 2019

BHP Group, the world’s biggest mining company, pledged $400 million in research funding to tackle carbon emissions caused by its customers such as steel mills.

The announcement by CEO Andrew Mackenzie means BHP is breaking ranks with many of its peers in actively working to reduce pollution from the industries that buy its minerals. The company will accelerate investments over the next five years in areas including development of carbon capture and storage technology under a broader push to assist customers to mitigate their contribution to climate change, Mackenzie said.

“Those who enjoy the benefits of our products should be able to do so with less and less impact,” Mackenzie said in a speech in London on Tuesday. “We must take a product-stewardship role for all emissions across our value chain.”

BHP is seeking to work with the steel sector and other industries, and will set public targets for action on customers’ emissions, Mackenzie said. Consumers of BHP’s products such as iron ore generate almost 40 times more emissions than the company’s own mining operations.

Miners, along with oil producers and the cement sector, are coming under concerted pressure on climate issues from some investor groups and are setting more stringent targets for so-called scope 1 emissions, direct carbon dioxide releases from their operations, and scope 2 emissions, which are related to the electricity the companies purchase to power projects.

However, the biggest mining companies disagree on how to approach the larger issue of scope 3 emissions — those generated by customers as a result of the use of the products they sell.

Accepting responsibility for scope 3 emissions should help build a common cause to reduce their impact, Mackenzie said.

“It should draw more people into the solution,” he said. “Rather then saying ‘It’s nothing to do with me.'”

While rival Rio Tinto Group has urged steelmakers to governments to take steps to reduce emissions, the company insists it shouldn’t be responsible for deploying technologies or setting goals to curb the discharges.

“We cannot provide hard targets for action that lies outside our control,” Rio Chairman Simon Thompson said at a May annual meeting in Perth.

Executive pay

Global industry accounts for more than a fifth of all greenhouse gas emissions, and the steel sector is among the must polluting, according to BloombergNEF.

BHP calculates its products generated scope 3 emissions of more than 590 million tons of carbon-dioxide equivalent in the 12 months to July last year, compared with combined scope 1 and scope 2 discharges of about 16.5 million tons. Rio’s scope 3 emissions in 2018 totaled 536 million tons, according to a February filing.

Along with setting new targets, Melbourne-based BHP intends to more closely link executive pay to action to reduce emissions, Mackenzie said. BHP is also examining options to sell its remaining thermal coal assets, people familiar with the matter said earlier this month.

“The evidence is abundant: Global warming is indisputable,” Mackenzie said Tuesday. “The planet will survive. Many species may not.”