Page 14 - Annual Report 2020

1.4.3 Stakeholder engagement continued

Investors
Shareholder perspectives are taken into account by the Board and its Committees in its decision-making and long-term strategic planning.
The Board uses formal and informal communication channels to understand the views of shareholders, in addition to Annual General Meetings
(AGMs). This includes meetings and discussions between the Group Chair, the Senior Independent Director and the Remuneration Committee
Chair and Institutional and Retail shareholders. A range of investors also presented directly to the Board. For more examples, refer to section 2.6.1.
Industry associations Remuneration policy
At a number of meetings in 2019 and 2020, the Board had in-depth Investors played an integral role in the development of the remuneration
discussion on the Group’s future approach to industry association policy approved at the October and November 2019 AGMs. During
membership. The Group Chair and CEO discussed the topic of industry meetings led by the Board Chair and the Remuneration Committee Chair
associations with a range of investors, and discussed investors’ feedback in April and May 2019, investors provided feedback on what they saw as
with the Board. The Board also received reports on management strengths and weaknesses of the existing policy, and potential means to
meetings with a range of investors on industry associations. Investor strengthen it. The Remuneration Committee factored this feedback into
feedback has been a key input to the Group’s future approach to industry a new policy proposal, which was the subject of an extensive further
associations, which has been reflected in supportive comments following round of consultation. Investor comments in this second round led to
publication. See bhp.com for our position on industry associations. refinements to the policy submitted for approval at the AGMs, including
the three changes made to the policy as set out on page 139 of the 2019
Annual Report.
Climate change Governance
Significant engagement was undertaken with investors on climate The Group Chair and Senior Independent Director sought feedback
change issues during FY2020. This comprised engagements to review from investors on governance practices as part of the annual cycle of
potential implementation approaches for the commitments announced meetings. This included the approach to the AGM and reporting practices.
in July 2019 as well as incorporation of climate change into the Group’s The Governance team, within management, seeks input from investors,
social value investor presentations, and engagement with key investor including ESG investors, on BHP’s reporting on sustainability. This feedback
groups, including Climate Action 100+. See bhp.com for the BHP has been incorporated into this year’s Annual Reporting documents.
Climate Change Report 2020.

Suppliers and customers
The Board and its Committees take into account the perspective of customers and suppliers during their deliberations. In FY2020, this included
reports from the CEO and the Chief Commercial Officer on discussions with customers and suppliers and particularly consideration of both
regarding COVID-19.
COVID-19 response Vendor rationalisation
Suppliers – We accelerated payments and reduced payment terms to The Board discussed strategies to consolidate mining materials
seven days (from 30 days) for small, local and Indigenous suppliers. In and consumables vendors for Minerals Australia, and the impact
Chile, we offered voluntary financial assistance to cover a significant part on other participants in the supply chain. Potential impacts on local
of contractor companies’ costs to maintain the remuneration of workers and Indigenous suppliers were considered as well as ways to mitigate
demobilised at our operations because of the pandemic. this risk, including KPIs for assets on local and Indigenous spend.
Customers – The impact of COVID-19 disruptions on our customers’
operations and our engagements with them to mitigate these were
captured in the regular COVID-19 updates from the CEO to the Directors.
Supply chain human rights and seafarer welfare Chile social issues
The Sustainability Committee discussed BHP’s risk and controls relating The Board discussed the situation in Chile since October 2019, including
to the potential for adverse human rights impacts in our supply chain, the social crisis, the health and economic crisis caused by COVID-19,
and had a specific deep dive into maritime seafarer welfare. Board and and the combined effects of the three, as well as the fact that the
Sustainability Committee reviews were also undertaken of our approach country will enter an intense electoral period, starting with the
to the supply chain through the discussion and approval of the Modern referendum for a new Constitution in October 2020, and ending with
Slavery Statement FY2020. the Presidential election in November 2021. The Board reviewed the
implementation of Social Value plans for the regions where we operate,
as those continue to be the most important instrument for BHP to build
trust and long-term relationships with our key stakeholders.
Climate change
Discussions related to how we will work with our customers and suppliers with respect to Scope 3 greenhouse gas emissions, including our FY2021
actions, CY2030 goals and long-term vision to support the economy-wide transitions necessary to meet the Paris Agreement goals by working
with customers and suppliers to achieve sectoral decarbonisation. The Sustainability Committee reviewed proposed measures to deploy our
US$400 million Climate Investment Program, which will include investment in emissions reduction projects across our operated assets and value
chain and is part of our commitment to take a product stewardship role in relation to our full value chain.

Environment
The Board and its Committees consider a range of environmental matters throughout the year including, detailed discussions relating to climate
change, tailings storage facilities, rehabilitation and closure.
Renewable power agreements in Chile Climate change
The Board approved four power purchase agreements (PPAs) that will The Board and its Committees spent significant time considering climate
meet the energy requirements for operations at Escondida and Spence change in relation to BHP’s business and strategy. These discussions
from 100 per cent renewable sources by the mid-2020s. The contracts considered a range of stakeholders, including investors, communities,
will effectively displace 3 million tonnes of CO2 per year from FY2022 governments, employees, customers and suppliers. These stakeholder
compared to the fossil fuel based contracts they are replacing. views were taken into account in considering our updated climate
change strategy.
In particular, during FY2020 the Board and Sustainability Committee
focused on the detailed development of the commitments set out in
July 2019: publicly setting a medium-term target for operational
emissions, the Climate Investment Program, Scope 3 emissions goals,
the link between emissions performance and executive remuneration,
and the work to release our new BHP Climate Change Report 2020.

12 BHP Annual Report 2020