BHP chief external affairs officer Geoff Healy has reinforced the company’s role in transitioning from maintaining a social licence to creating social value.
“For us, it is – plain and simple – good business. We are part of a society that expects more of us. We recognise that our success depends on our ability to earn their trust and confidence,” Healy, speaking at an investor and analyst briefing in London, said.
“And we know that this means changing the way we do business at all levels, from local to global.
“When we make business decisions, both financial value and social value considerations come into play – each depends on the other for the decision to be effective.
“If we get this right, we firmly believe we will win access to the best talent, resources and markets, and set ourselves up to deliver a sustained competitive advantage.”
BHP’s products are essential to everyday life. Iron ore and metallurgical coal provide steel, while oil, gas and energy coal products power global mobility.
Copper and nickel are essential in the transition to a lower-carbon future, as electric cars four times as much copper as a standard car.
Nickel sulphate is needed for the lithium-ion batteries that power those cars. Even wind turbines rely on copper or steel.
The challenge is delivering these products in a sustainable and responsible manner. BHP chief executive, Andrew Mackenzie said, “The longevity of BHP’s assets means that we must think and plan in decades.”
Healy added: “That is the nature of our industry. We make a relatively small number of large, long-term capital investments that are structurally immobile. We can’t just close up the factory and relocate when the going gets tough.
“When we invest in a region, we become an intrinsic part of the local community for decades. Sometimes, we create those communities.”
If companies fail to navigate social issues, Healy said, an imbalance in community relations can negatively impact the financials of the business.
“A disorderly transition to decarbonisation has the potential to threaten the viability of entire commodities in our product suite,” Healy said.
“And a social and environmental disaster, such as another significant tailings dam failure, has the potential to be existential. These risks are real and we manage them every day.”
Adaptation is vital to remain competitive in a world that is ever-changing.
According to Healy, the main changes impacting global corporations include the rise of political populism and employee advocacy; the effects of income inequality on regional communities; and the influence of environmental, social and corporate governance among asset managers.
On a broader scale, the pressures facing the mining industry include governments nationalising resources, decarbonisation targets, attracting talent – with a 41 per cent fall in mining-engineering-course enrolment in Australia in recent years and a lack of optimism – with nearly seven-in-10 people believing the best days of the mining industry are in the past.
BHP aims to solve these challenges by incorporating social value creation at the heart of their competitive strategy.
“To obtain access to the best resources, we must be the partner-of-choice for governments,” Healy said.
“To secure the best talent, we must be committed to making a positive societal impact. And, to secure the best partners, we must be trusted by our community partners.”
These goals feed into the purpose of BHP, ‘to bring people and resources together to build a better world.’
“The winners will be those who can see past the risks to the opportunities and who can grasp them and turn them into a competitive advantage. This is the spirit that underpins our transition from licence to value,” Healy said.
“We know that when we consider social impacts in our decision-making; and when we build respectful and mutually beneficial relationships, we create sustainable value for all of our stakeholders; and in particular for our investors.”