Page 70 - Annual Report 2020

1.7.8 Climate change continued
Contributing to the global response We are a signatory to the UNFCCC ‘Paris Pledge’ (which brings
Climate change is a global challenge that requires collaboration, together cities, regions, companies and investors in support
and industry has a key role to play in supporting policy of the Paris Agreement) and the World Bank’s ‘Putting a Price
development. We engage with governments and other on Carbon’ statement, and a partner in the Carbon Pricing
stakeholders to contribute to the development of an effective, Leadership Coalition, a global initiative that brings together
long-term policy framework that can deliver a measured transition leaders from industry, government, academia and civil society
to a low carbon economy. We prioritise working with others to with the goal of putting in place effective carbon pricing policies.
enhance the global policy and market response and support the We also advocate for a framework of policy settings that will
development of market mechanisms that reduce global GHG accelerate the deployment of carbon capture, utilisation and
emissions through projects that generate carbon credits. storage and/or carbon capture and storage (CCUS). Modelling
We believe that polices to spur rapid action should be of 2°C and 1.5°C scenarios consistently highlight the critical role
implemented in an equitable manner to address competitiveness of low emissions and negative emissions technologies. This is
concerns and achieve lowest cost abatement. why BHP is committed to catalysing action to accelerate CCUS
commercialisation at scale and acceptable cost and is a member
We believe an effective policy framework should include a of the Global CCS Institute and the UK Government’s Council
complementary set of measures, including a globally consistent on Carbon Capture Usage and Storage.
price on carbon, support for low emissions and negative
emissions technologies and measures to build resilience.

Industry association review community groups and industry associations. As a result of that
feedback, we decided to make the following key changes to our
BHP is a member of industry associations around the world. approach to industry associations:
We believe associations can perform a number of functions that
can lead to better outcomes on policy, practice and standards. • We developed and published our Global Climate Policy
(1)
Standards, which are intended to provide greater clarity on
Over the past five years, there has been increasing stakeholder how our climate change policy positions should be reflected in
interest in the role played by industry associations in public policy our own advocacy and that of associations to which we belong.
debates, particularly in the context of climate change policy.
We published our first industry association review in 2017, which • We announced our intention to work with the various associations
sought to identify ‘material differences’ between BHP and our that represent the minerals sector in Australia to develop and
member associations on climate change policy. We repeated this agree a protocol on policy advocacy, the purpose of which would
exercise in 2018 and 2019. For the latter, we have broadened our be to define the policy areas on which the associations advocate,
methodology to capture additional organisations and to provide an having regard to their jurisdictional responsibilities.
assessment of the extent of overall alignment between BHP and our • We announced our intention to work with key associations
association memberships on climate change policy. Outcomes from in Australia to develop and publish an annual advocacy plan,
our 2019 review are set out in our 2019 Industry Association Review the purpose of which is to provide stakeholders with greater
Report available at bhp.com. transparency on the policy priorities and activities of
Following that 2019 review, we commenced a process to the associations.
understand how we could further enhance our overall approach • We made a number of enhancements to our own disclosure
to industry associations to ensure we maximise the value of our of our industry association memberships, to provide more
memberships. We have also taken further steps to address investor information on our material association memberships, disclose
expectations around climate change advocacy by industry in ‘real time’ if a relevant association substantially departs from
associations by engaging with a broad range of stakeholders from our climate policy standards, and update our industry
around the world, including investors, civil society groups, association review process.

Managing risk and opportunity Engagement and disclosure
Risks related to the potential physical impacts of climate change BHP was one of the first companies to align our climate-related
include acute risks resulting from increased severity of extreme disclosures with the recommendations of the Financial Stability
weather events and chronic risks resulting from longer-term Board’s Task Force on Climate-related Financial Disclosures (TCFD).
changes in climate patterns. In order to strengthen our approach to We believe the TCFD recommendations represent an important
adapting to actual or potential physical impacts of climate change, step towards establishing a widely accepted framework for
BHP undertook a series of assessments and engagements in climate-related financial risk disclosure and we have been a firm
FY2020. These included a questionnaire for our operated assets, supporter of this work. Our Vice President of Sustainability and
industry benchmarking assessment, internal policy review and Climate Change, Dr Fiona Wild, is a member of the Task Force.
extensive engagements across BHP. We take a risk-based approach We are committed to continuing to work with the TCFD and our
to adaptation, including consideration of the potential peers in the resources sector to support the wider adoption of the
vulnerabilities of our operated assets, investments, portfolio, TCFD recommendations and the development of more effective
communities, ecosystems and our suppliers and customers across disclosure practices within the sector.
the value chain.
Transition risks arise from policy, regulatory, legal, technological, More information on climate change is available at
bhp.com/climate as well as in the BHP Climate Change
market and other societal responses to the challenges posed by Report 2020.
climate change and the transition to a low carbon economy.
A broader discussion of our climate-related risk factors and risk
management approach is provided in the risk factors set out in
section 1.5.4, as well as in the BHP Climate Change Report 2020
at bhp.com/climate.

(1) https://www.bhp.com/our-approach/operating-with-integrity/industry-associations-bhps-approach/

68 BHP Annual Report 2020