BHP secures key investor support over climate plan
BHP will work on a green strategy with one of the world’s largest steelmakers but has cautioned the road to net zero emissions for steelmaking remains uncertain.
BHP will work on a green strategy with one of the world’s largest steelmakers as it moves towards cutting pollution from buyers of its commodities, but has cautioned the road to net zero emissions for steelmaking remains uncertain.
However its climate change road map won crucial support from shareholders at its London annual general meeting on Thursday night, as the mining giant signed a pact with South Korea’s Posco to jointly explore technologies to cut greenhouse gas pollution in steelmaking.
Investors in BHP’s London-listed shares voted 83 per cent in favour of the climate plan, proxy results show. BHP’s Australian investors will vote on the plan on November 11. The company had recommended investors support the climate transition action plan.
Influential proxy adviser CGI Glass Lewis recommended BHP shareholders vote against the company’s climate transition plan, saying it was unclear if the targets were science-based or certified by outside organisations although advisers ISS and ACSI supported the climate scheme.
BHP will tip in $US10m ($13.5m) over the next five years, taken from its $US400m climate investment program announced in 2019.
The company in September set a net zero emissions goal for all Scope 3 emissions by 2050 with specific targets for both its direct suppliers and shippers of its products. However, BHP stopped short of extending the goal to its steelmaking customers, and said on Thursday at its annual meeting that hitting net zero for the steel industry was difficult.
“What it does mean at this stage is we can’t set a hard target for scope 3 steel emissions reductions,” BHP chairman Ken MacKenzie told the AGM.
“We can’t set a target where we don’t have a reasonable basis to believe we can achieve it.
“So the purpose of the say on climate is to provide shareholders with an opportunity to provide feedback on our plans, our targets and goals and our approach to climate disclosure.”
Hedge fund billionaire Chris Hohn turned climate activist, the founder of the $US30bn The Children’s Investment Fund Management, is pressing companies to properly divulge their carbon exposure and give shareholders a vote on their climate plans through his Say On Climate pledge.
“The pathway to net zero for steelmaking is not yet clear but we believe that, by working with industry leaders like Posco, together we will find solutions more quickly to help reduce carbon emissions in steelmaking and along the value chain,” said BHP’s chief commercial officer, Vandita Pant.
However, BHP chief executive Mike Henry said the miner was focused on reducing climate change ambitions.
“While we can’t determine the outcomes on that front alone, we are working with our customers and suppliers to stimulate and support their efforts to reduce emissions,” Mr Henry said.
“This is in keeping with our long-term goal to pursue net zero scope 3 greenhouse gas emissions by 2050 for our reshaped portfolio.”
The Posco deal will see pilot and plant trials held including boosting coke quality and assessing carbon capture storage and utilisation to lower carbon intensity in the steel manufacturing blast furnace.
The pair will share research on hydrogen-based direction reduction technology, the use of biomass in steelmaking and using BHP’s carbon offsetting skills to develop carbon neutral steel products.
The mining giant committed to cut scope 3 emissions – those from downstream manufacturers, such as steel mills, that use the iron ore and commodities that BHP mines – under former boss Andrew Mackenzie in 2019, who said a global dependence on fossil fuels posed an “existential” risk to the planet.
Mr Henry, his successor, followed through on the ambition and plans for emissions in 2030 to be 30 per cent lower than 2020 levels on a path for net zero emissions by 2050.
While BHP has separated the giant task into different categories, it has ultimately backed away from setting a hard target for steelmakers that account for about three-quarters of its scope 3 emissions.
The company has previously signed similar emissions reduction deals with steelmakers China Baowu, JFE Steel and HBIS Group.
It comes after the International Energy Agency warned Australia must dramatically boost its climate change targets ahead of the looming Glasgow COP26 summit or face being stranded by its international trading partners.
Scott Morrison’s plan for net zero emissions by 2050 will go to cabinet on Wednesday with the federal government under renewed pressure after the Business Council of Australia demanded the nation almost double its emissions reduction target by 2030 or face a crippling hit to the economy.
The IEA, which advises Western governments on energy policy, said Australia’s plan to reduce emissions by 26 to 28 per cent below 2005 levels by the end of the decade needs to be substantially lifted to ensure the country does not become a climate laggard.
More than 50 countries and the European Union had pledged to meet net zero emissions targets, the IEA said.
Still, the path to net zero remains highly uncertain ahead of the climate summit. China conceded this week its energy crisis and need to secure fossil fuels would mean it would reassess its timetable for hitting peak carbon emissions.
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