Page 41 - Annual Report 2020

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Management
We have a Climate Change Position Statement that sets out our developments that could impact the resilience of our portfolio
views on climate change and our commitments to act in response to and remain alert to policy, regulatory, legal, technological, market, Strategic Report
climate change. The Our Requirements for Environment and Climate societal and environmental developments that may indicate changes
Change standard establishes minimum requirements for managing to our signposts and the development of new uncertainties in our
climate change threats and opportunities and supports the execution portfolio analysis.
of our climate change strategies and plans through our corporate We seek to mitigate our exposure to risk arising from current and
planning processes. emerging policy and regulation in our operating jurisdictions and markets
We work with globally recognised agencies to obtain regional analyses by reducing our operational emissions. In CY2020, we set a medium-term
of climate science to improve our understanding of the potential climate target to reduce our operational GHG emissions (Scope 1 and Scope 2
vulnerabilities of our operations and communities where we operate, from our operated assets) by at least 30 per cent from FY2020 levels
(1)
and to inform resilience planning at an asset level. We take a risk-based by FY2030. We also take a product stewardship approach to emissions Governance at BHP
approach to adaptation, including consideration of the potential in our value chain. In CY2020, for example, we set public goals to address
vulnerabilities of our operated assets, investments, portfolio, Scope 3 emissions.
communities, ecosystems and our suppliers and customers across Identifying cost-effective and robust carbon offsets is important to
the value chain. meeting our emissions reduction commitments and managing
Our operated assets are required to develop plans to build climate reputational risk. We therefore also support the development of market
resilience into their activities and we require proposed new investments mechanisms that reduce global GHG emissions through projects that
to assess and manage risks associated with potential physical impacts generate carbon credits.
of climate change. We also respond to our exposure to policy and regulatory risk
Climate-related scenarios, themes and signposts are used to evaluate by advocating for the development of an effective, long-term
the resilience of our portfolio and inform BHP’s strategy. Climate-related policy framework that can deliver a measured transition to a low
risks are assessed alongside the other threats and opportunities that carbon economy.
BHP faces when making capital expenditure decisions or allocating The Group continues to monitor policy, market and technological changes Remuneration Report
capital through our CAF. Our Risk Framework helps identify these risks
for input to the prioritisation of capital and to investment approval and community, investor and regulatory standards and expectations as
they develop, to inform appropriate management actions.
processes. Our investment evaluation process has incorporated market
and sector-based carbon prices for more than a decade. For more information on our climate change risk management
In CY2020, we published the BHP Climate Change Report 2020 strategy, refer to the BHP Climate Change Report 2020 available at
bhp.com/climate.
that describes our latest portfolio analysis, including a 1.5°C Paris
Agreement-aligned scenario. We continue to monitor climate-related
FY2020 insights Directors’ Report
During FY2020, community, investor and regulatory standards and expectations in relation to climate change continued to increase. Public response
to severe natural disasters, including bushfires in Australia this year, heightened scrutiny of potential links between climate change and physical impacts
and spurred calls for more rapid and aggressive action from governments and companies. In addition, the COVID-19 pandemic and the subsequent
reduction in economic activity decreased emissions, which may lead to opportunities to restart economies with a greater focus on sustainability. Financial Statements

Shareholder information

(1) FY2020 baseline will be adjusted for any material acquisitions and divestments based on greenhouse gas emissions at the time of the transaction. Carbon offsets will Additional information
be used as required.

BHP Annual Report 2020 39