BHP sets net-zero goal for suppliers as climate scrutiny grows

BHP, the nation’s biggest mining company, has taken another step in the push to slash emissions across its global supply chain, with a new goal for suppliers and shippers to be carbon-neutral by 2050.

In the latest sign of big emitters responding to society’s escalating pressure on climate change, BHP on Tuesday announced the expansion of its existing goals to lower its indirect carbon footprint, known as Scope 3 emissions, by requiring other participants in its value chain to achieve net-zero.

Australia’s biggest mining companies are facing growing calls to tackle emissions across their global supply chains.Credit:Krystle Wright

“We are committed to playing our part through meaningful action in our value chain, continued support for low-carbon technology solutions and advocating for policy outcomes that enhance the global response to climate change,” BHP chief executive Mike Henry said.

However, BHP’s new goals, targeting the operational emissions of its shippers and its suppliers of goods and services, have drawn immediate criticism from some shareholder campaigners because they fail to include the Asian steel mills that burn its coals and iron ore, which make up the biggest share of its Scope 3 emissions.

“Despite record underlying profits of $US17 billion, BHP has committed just $US65 million to decarbonising steel production,” said Dan Gocher of the Australasian Centre for Corporate Responsibility (ACCR).

“BHP can and must do more to reduce the emissions from steel-making.”

The Melbourne-based miner’s Scope 3 emissions â€" including emissions from its suppliers, shipping and the burning of the raw materials it sells around the world â€"were 402.5 million tons of carbon dioxide-equivalent in the 12 months to June 30.

Along with targets to cut its own emissions by 30 per cent by 2030 and to hit net-zero by 2050, BHP last year said it would also seek to reduce “emissions intensity” of its customers in the steel-making sector by 30 per cent. Emissions intensity refers to how much carbon dioxide is emitted for every tonne of steel produced, rather than absolute emissions

Instead of setting net-zero targets for the steel sector, BHP and rival iron ore miner Rio Tinto have entered into partnerships with Chinese steel giants, including Baowu, to investigate and invest in decarbonisation technology such as clean hydrogen, which could be used to substitute coal in steel-making furnaces that presently account for about 8 per cent of the world’s greenhouse gas emissions.

“Recognising the particular challenge of a net-zero pathway for customers’ processing of our products ... we cannot set a target, but will continue to partner with customers and others to accelerate the transition to carbon-neutral steelmaking and other downstream processes,” BHP said.

Also on Tuesday, BHP said it had decided for the first time to support an activist-led climate resolution filed against it at its upcoming investor meetings in Australia and the United Kingdom in November.

The resolution, prepared by the ACCR, calls for BHP to undertake a sweeping review of the company’s industry associations to identify policy areas of “inconsistency” with actions needed to limit global temperature rises to 1.5 degrees above pre-Industrial levels in line with the Paris Agreement’s goals.

“BHP must bring an end to its long-standing support for destructive lobbying that has resulted in Australia becoming a global laggard on climate action,” Mr Gocher said.

The BHP board said it had recommended shareholders support the resolution because it was “substantively aligned” with the company’s existing approach regularly monitoring and reviewing its lobby group links. A full review of its industry associations is due to take place next year.

“If BHP’s review identifies a material difference with a member association on climate policy, BHP will consider a range of remediation measures, including suspension or cessation of membership,” it said.

Minerals Council of Australia chief executive Tania Constable has responded to the resolution’s claims by saying the association and its members supported the Paris Agreement and had made significant progress on environmental, social and governance issues in recent years. She cited the adoption of new lower-emissions technology at mine sites, a commitment among its membership for new site-specific emissions and biodiversity reporting protocols, and support for federal funding for carbon capture and storage (CCS) and hydrogen-production programs.

“Despite the disruption of the global pandemic, MCA members have continued to act on the climate challenge and prepared appropriately for future carbon-related risks and opportunities,” Ms Constable said.

“Yet the ACCR ignores or derides these practical measures and tangible progress in pursuing its campaign against the minerals industry.”

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