BHP has back-tracked on its support for the Morrison government use of surplus Kyoto units and has put pro-fossil fuel lobby groups on notice, in a new climate position statement published by the Australian mining giant.
A set of ‘Global Climate Policy Standards‘ has been issued by BHP just days ahead of the publication of its latest financial results, and is likely to be an attempt to pre-empt shareholder advocacy groups that are seeking to push BHP to improve its position on climate action, and in particular, BHP’s involvement in pro-fossil fuel lobby groups.
BHP undertook to review its membership of lobby groups like the Minerals Council of Australia and the Australian Petroleum Production and Exploration Association (APPEA), which have taken a strong pro-coal and pro-gas stances respectively, in their lobbying efforts.
While BHP opted to remain a member of the Minerals Council, saying that it was better off being a positive influence within the groups rather than withdrawing, it has established a new set of ‘expectations’ for such groups when it comes to climate change. The new standards seek to ensure that any advocacy supported by BHP is consistent with the goals of the Paris Agreement, including a transition to zero net emissions by 2050 limiting global warming to well below 2 degrees.
“Climate change is a pressing global challenge and urgent action is required. BHP is taking a number of actions to ensure we are playing our part in addressing this challenge. An important component of our climate change strategy is collaborating with others to enhance the global policy response including advocacy for policy that will enable a ‘well below 2°C’ world,” the BHP position statement says.
“BHP engages in policy debates both directly and indirectly through our membership of industry associations. We believe industry associations perform a number of functions that can lead to better outcomes on policy, practice and standards. We also believe it is important that there is clarity as to the advocacy standards held BHP as a member of associations globally.”
CEO of the Investor Group on Climate Change, Emma Herd, said the new climate policies adopted by BHP were a win for investor engagement with companies on climate issues and called on all mining and resources companies to ensure they are supporting lobbying efforts that are consistent with the Paris Agreement.
“Investors look forward to continuing to engage BHP to monitor industry associations’ efforts to align with these expectations and address any inconsistencies in their activities with the action required to meet the Paris Agreement goals,” Herd said.
“All mining companies should be working to ensure their industry associations are playing a positive role in establishing stable and responsible climate change policy that helps accelerate the transition to net-zero emissions by 2050.”
Significantly, BHP’s new policy statement confirms that the mining giant will not support the use of contentious ‘Kyoto carryover credits’ to meet Australia’s emissions reduction goals, which were singled out as the kind of lobbying position that would “unduly exacerbate policy tensions”.
It is a significant reversal from BHP, which had previously supported the Morrison government’s planned use of surplus Kyoto-era emissions permits, a plan which has largely been panned locally and internationally as a cheap accounting trick.
The Morrison government has sought to use “surplus” units from its 2020 emissions reduction target under the Kyoto Protocol towards meeting future targets under the Paris Agreement. The use of the ‘Kyoto surplus’ units is still the subject of international negotiations and is likely to be legally baseless if an agreement is not reached amongst other countries.
If used, the surplus units would effectively halve the amount of Australia’s emissions reductions necessary to meet the government’s current 2030 emissions reduction target, and have therefore been criticised as an accounting dodge and not within the spirit of the Paris Agreement.
Shareholder advocacy group, the Australasian Centre for Corporate Responsibility (ACCR), welcomed BHP’s reversal of its position on the Morrison Government’s plan to use the Kyoto carryover accounting shortcut.
“In 2019, investors were aghast to learn that despite BHP’s claims of climate leadership, it supported Kyoto carryover credits, which would effectively halve Australia’s 2030 emissions target,” ACCR’s director for climate and environment, Dan Gocher, said.
“Ahead of the federal election in 2019, the Minerals Council of Australia declared it ‘sensible’ for the government to effectively cheat on its 2030 target. It wasn’t sensible then, and it isn’t sensible now. We welcome the fact that BHP has finally withdrawn its support for this absurd accounting trick.”