BHP won’t quit pro-coal industry groups

BHP has resisted pressure to quit membership of industry associations which have drawn the ire of activist investors.

BHP has resisted pressure to quit membership of industry associations which have drawn the ire of activist investors amid accusations groups such as the Minerals Council of Australia have lobbied against action on climate change.

The mining giant saw a big backlash from institutional investors on the issue at its November annual shareholder meeting in Sydney, when more than $17.7bn worth of shares — almost a third of total shares cast — were voted in favour of a motion calling on it to quit memberships of organisations seen as opposing action on climate change, such as the MCA.

But despite intensifying shareholder pressure, BHP said on Thursday it would not quit any of the 30 industry associations under review, saying only that it will renew pressure on a range of groups to bring their policies into line with BHP’s.

The results of the review found BHP had “material differences” in outlook on climate change with at least four of them, but the mining giant said it believed it still gained significant benefits from membership of the four — the American Petroleum Institute, the Mining Association of Canada, the New South Wales Mineral Council and the US Chamber of Commerce — where it had substantial disagreements on issues surrounding climate science, carbon emission reduction targets and global agreements to mitigate climate change.

The Australian push for BHP to revoke its membership of industry associations has been led by corporate lobbying group the Australian Centre for Corporate Responsibility, which claimed partial credit for November’s annual meeting backlash.

ACCR director Dan Gocher said the outcome of BHP’s review was a “vindication” of shareholder concerns expressed at the annual meeting.

BHP closed steady at $38.60

“BHP asked shareholders to hold fire until the end of the year, and then released an impotent review in which the company refuses to bring any of its industry groups to heel. The investors who backed BHP’s board now look foolish and weak, in the midst of a catastrophic climate-related bush­fire crisis in Australia,” he said.

“This only amplifies our concerns about incoming CEO Mike Henry’s proximity to the worst of the fossil fuels lobby in Australia.”

The latest review is BHP’s second, following significant pressure on the company to quit organisations such as the Minerals Council of Australia and Coal21 — a group originally set up to back research into carbon capture technology but which has bankrolled pro-coal advertising campaigns — which activist groups blame for lobbying against the introduction of policies that would mitigate carbon emissions.

BHP’s latest review found that neither group held positions that materially differed from BHP’s own, although the review said BHP believed “that some of Coal21’s broader communications activities have not been consistent with its core objective”.

But the company said it had elected to maintain its membership of Coal21 after the organisation’s board had changed its constitution to confirm its focus on researching low-emissions technology and carbon capture research and to “ensure that any communications relate only to technical matters in service of its technical program of work”.

“The constitutional amendment is consistent with Coal21’s underlying objectives to undertake a technical program of work into low-emissions technology, and confirms that broader advocacy and communications activities are not within the scope of the company and will not form any part of the company’s forward program of work,” the BHP review said.

Similarly, BHP said it would maintain its membership of the NSW Minerals Council because it “receives a moderate level of benefit from the broader activities of the NSWMC”, including work on health and safety issues, community engagement and workforce development and diversity, despite significant differences on energy policy and climate change.

BHP said the NSWMC had no position on a carbon price, and focused its energy policy advocacy too heavily on reliability and affordability, without enough focus on emissions reduction — the third leg of the so-called “energy trilemma”.

“We believe climate policy and energy policy are inextricably linked, and that energy reliability, energy affordability and emissions reduction should be considered on an integrated basis,” BHP said.

BHP said it had no issue with the bulk of the Minerals Council of Australia’s policy position and advocacy, and its latest industry association review “did not identify any material differences between BHP and the MCA on climate and energy policy”.

Mr Gocher said BHP’s decision was “scandalous”.

“While BHP accepts that it is substantially misaligned with several of its industry associations, in failing to attach real consequences to any of those groups, BHP has demonstrated its duplicity and weakness,” he said.

“Shareholders will be wondering why the “moderate” benefits which BHP receives from its membership of the NSW Minerals Council should trump the “significant” policy differences.