BHP Group

BHP is among the top performers on management of climate change issues. Not only are the company’s Board of Directors directly responsible for managing climate change-related risks and opportunities, they are also advised by internal and external experts to inform their decisions. The company has also introduced climate change incentives to encourage all employees to contribute to achieving scope 1, 2 and 3 emissions reductions. The company’s climate scenario analysis is detailed, covers the main parts of its business, uses a 2050 time frame and includes carbon pricing in line with the 1.5°C scenario.

BHP aims to achieve carbon neutrality by 2050 and has set up an intermediary target to achieve a 30% reduction in its scope 1 and 2 absolute emissions by 2030 compared to 2020 levels. While these targets demonstrate BHP’s ambition to reduce its emissions, they could not be assessed as they include offsets.

BHP reports it will prioritise emissions reductions at its operated assets over the use of offsets. However, the company should ideally establish targets that remove the need for offsets altogether for both the emissions of its own operations (scope 1 and 2) and sold products (scope 3).

BHP’s strategy focuses on reducing scope 3 emissions from its suppliers. The company has a target for 30% emissions intensity reduction in the steelmaking industry expected to be adopted widely post-2030, and a 40% emissions intensity reduction for all of BHP’s chartered shipping products. BHP’s strategy is substantiated with actions such as the launch of a global tender for lower-emissions LNG-fuelled bulk carrier vessels, investments in direct air capture technologies, and a partnership with the Peking University to identify barriers to the effective deployment of carbon capture, use and storage (CCUS) technologies in the steel and iron industries across China.

Despite a significant decrease in BHP’s oil and gas extraction volumes between 2014 and 2019, the share of fossil fuels in the company’s portfolio as well as the main regions from which BHP extracts oil and gas have not changed over this period. As a result, BHP demonstrates a stable trend in its scope 1 and 2 emissions intensity and strongly diverges from its 1.5°C pathway, which requires the company to achieve an annual reduction in emissions intensity of close to 10% until 2024. Regarding locked-in emissions, BHP is forecast to use almost all of its carbon budget by 2050. If BHP were to keep exploring for new sources, it would be at risk of overshooting its carbon budget. The company should seize this opportunity to significantly reduce its absolute emissions and comfortably remain within its carbon budget.

BHP is one of the few companies assessed in this benchmark that has publicly reviewed the alignment of trade associations with its own climate ambitions and tried to use its position in associations to drive change from within. However, these efforts are undermined by BHP’s membership in the Board of the Australian Petroleum Production and Exploration Association (APPEA) and the American Petroleum Institute (API), both of which are considered to hold a negative stance on climate policy. BHP can show leadership in this area by withdrawing from trade associations known for their negative stance on climate policy or by actively using its position in these associations to drive support for climate policy.

BHP aims to achieve carbon neutrality for its scope 1 and 2 emissions by 2050 and has set up an intermediary target to achieve a 30% reduction in its scope 1 and 2 emissions by 2030 compared to 2020. The company also plans a 40% reduction in the scope 3 emissions intensity of its chartered shipping products.

BHP plans to purchase low-carbon electricity for its Chilean copper operations and Queensland coal mines. To reduce its scope 3 emissions, BHP has launched a global tender for lower-emissions LNG-fuelled bulk carrier vessels and is also investing in low-carbon technologies in the steelmaking industry.

In 2019, BHP allocated nearly 54% of its capital expenditure (CapEx) to copper and iron, which are critical minerals for the energy transition, compared to its CapEx of 21% for oil and gas. However, BHP has not disclosed its CapEx and R&D directed to low-carbon technologies and low-carbon business activities.

BHP has divested itself of its shale assets in the USA in 2019 and reports plans for further divestment of its mature oil and gas assets and exiting thermal coal. BHP is also divesting itself of three coal mines in Australia and Colombia to focus its portfolio on higher-quality coking coals that can be used in the steelmaking industry.

While BHP’s copper and iron assets are suited for a low-carbon economy, the company is still reliant on coal, oil and gas. The company’s scope 1, 2 and 3 emissions intensity are projected to significantly increase between 2019 and 2024, when in fact they should be decreasing by nearly 4% to align with the company’s 1.5°C pathway.