BHP will launch a $US400 million ($571.1 million) climate investment program aimed at reducing emissions from its operations and those generated from the use of its resources.
The program was announced in London by BHP chief executive officer Andrew Mackenzie, who was steadfast on the company’s view of climate change.
“The evidence is abundant: global warming is indisputable,” Mackenzie said.
BHP will establish a medium-term, science-based target for scope one and two emissions in line with the Paris Agreement, while also focusing on “scope three emissions.”
“These emissions are generated as customers transport, transform and use our products to serve the needs of billions of people and they are almost 40 times higher than the emissions from our own operations,” Mackenzie said.
BHP has therefore committed to working with shippers, processors and users of its products to reduce scope three emissions.
“Those who enjoy the benefits of our products should be able to do so with less and less impact,” Mackenzie said.
BHP’s CEO referenced last year’s International Panel on Climate Change’s (IPCC) report that revealed the projected physical impacts and risks of global warming are much worse at two degrees than 1.5 degrees.
This led BHP to update its climate portfolio analysis in 2020, as the company will evaluate the potential impacts of a broader range of scenarios and a transition to “well below two degrees.”
Mackenzie also revealed that BHP would strengthen the link between executive remuneration and emissions performance from 2021.
“For many years performance against emissions targets has been considered in BHP’s executive remuneration plans. From next financial year we will clarify and strengthen this link and further reinforce the strategic importance of action to reduce emissions,” he said.
While admitting there was “no one simple silver bullet” to solve the issue, Mackenzie said the risks involved with the crisis could be “existential”, requiring a holistic approach from the mining giant.
The complexity of the issue was described by Mackenzie, who said “contributions of any one solution can be exaggerated, worse still, important trade-offs and unacceptable consequences, ignored.”
Pointing to the aura surrounding electric vehicles, Mackenzie explained they were considered to be lower carbon than internal combustion engines, but the climate effect is redundant if power is generated from fossil fuels being released further up the production chain.
As such, “there is an opportunity cost for any decision we make”, therefore requiring what Mackenzie described as an “all of the above approach.”
“It is the right thing to do, it makes good business sense, a concerted global effort is required, and the future depends on it,” he concluded.