Skip to content

BHP accepts the Intergovernmental Panel on Climate Change (IPCC) assessment of climate change science, which has found that warming of the climate is unequivocal, the human influence is clear and physical impacts are unavoidable. Read our full climate change position statement.

Climate change is a global challenge that requires a collaborative market and policy response. Playing our part in responding to climate change is a priority governance and strategic issue for BHP. Our Board is actively engaged in the governance of climate change issues, supported by the Sustainability Committee. Management has primary responsibility for the design and implementation of our climate change strategy.

Our climate change strategy focuses on reducing our operational greenhouse gas (GHG) emissions, investing in low emissions technologies, promoting product stewardship, managing climate-related risk and opportunity, and working with others to enhance the global policy and market response.

Operational emissions

As a major energy consumer, managing energy use, ensuring energy security and reducing GHG emissions at our operations are key components of our climate change strategy. Reducing our operational emissions is a key performance indicator for our business and our performance against our targets is reflected in senior executive and leadership remuneration. From 2021, the link between our targets and management remuneration will be further strengthened to reinforce the strategic importance of action to reduce emissions.

We have been publicly reporting our operational emissions – and undertaking initiatives to reduce them – since the 1990s. Our five-year GHG emissions reduction target, which took effect from 1 July 20171, is to maintain our total operational emissions in FY2022 at or below FY2017 levels while we continue to grow our business. Our target builds on our success in achieving our previous five-year target.

We have also set the longer term goal of achieving net-zero operational GHG emissions in the latter half of this century, consistent with the Paris Agreement. In order to set the trajectory towards achieving that goal, in FY2020 we intend to develop a medium-term target for operational emissions.

Performance

Our combined Scope 1 and Scope 2 emissions (operational emissions) in FY2019 totalled 14.7 million tonnes of carbon dioxide equivalent (CO2-e), 3 per cent below our FY2017 target baseline2. This decrease is primarily due to a change in the electricity emissions factor for Minerals Americas that resulted from the interconnection of Chile’s northern grid system, which is mainly fossil fuel-based, and southern grid system, which has a higher proportion of renewable energy.

Sustainability

(a) Scope 1 and 2 emissions have been calculated on an operational control basis in accordance with the GHG Protocol Corporate Accounting and Reporting Standard. Comparisons of data over the period FY2015 to FY2016 should be made with consideration of the divestment of South32 during FY2015 (FY2015 data excludes emissions from South32 operations between the date of the divestment and 30 June 2015). Data over the period FY2017 to FY2019 is displayed with Onshore US emissions shown separately for comparability (12 months of emissions in FY2017 and FY2018, and four months of emissions in FY2019 prior to divestment of this asset).
(b) Scope 1 refers to direct GHG emissions from operated assets.
(c) Scope 2 refers to indirect GHG emissions from the generation of purchased electricity and steam that is consumed by operated assets (calculated using the market-based method).
(d) FY2017 is the base year for our current five-year GHG emissions reduction target, which took effect from FY2018. The FY2017 baseline has been adjusted for the divestment of our Onshore US assets to ensure ongoing comparability of performance. The baseline will continue to be adjusted for any material acquisitions and divestments based on GHG emissions at the time of the transaction; carbon offsets will be used as required.

Our Scope 1 and 2 emissions inventory is available to download as part of our GHG data Excel file (XLSX 80 kb).

Investing in low emissions technologies

Defining a pathway to net-zero GHG emissions for our long-life assets requires planning for the long term and a deep understanding of the development pathway for low emissions technologies (LETs).

Our LET strategy is threefold. First, we work to adapt mature technologies such as light electric vehicles, in order to integrate them safely and effectively into our operations. Second, in the medium term, we create road maps for development and adoption of LETs that support our goal of net-zero emissions, which may include trials and demonstrations of technology in our production environments. Finally, we look for early stage LETs that hold high potential for future results. For these emerging technologies, we seek opportunities for collaboration, research and other ways to accelerate their development and adoption.

Our LET strategy has been developed to address BHP’s key sources of operational GHG emissions.

  • Electricity use: Emissions from electricity use make up 43 per cent of our operational emissions. This includes the power we generate ourselves, as well as the power we buy from grids around the world. To support the goal of moving toward zero emissions electricity, we are considering ways to accelerate the integration of renewable energy into our operations, such as through electricity contracts and, in some cases, through directly supplying our operations with greater proportions of lower carbon energy.

  • Materials movement: Emissions from fuel and distillate make up 42 per cent of our operational emissions, much of which is from diesel used in moving material (for example, haul trucks). The first phase of moving to net-zero diesel emissions is focused on adapting our fleet. We are currently trialling the use of light electric vehicles at Olympic Dam, by converting a diesel vehicle to run on lithium ion batteries. This has the added benefit of reducing diesel particulate matter, which has the potential to contribute to improved health and safety in our underground mining operation. Find out more about our electric vehicle trial. One of the high potential options for GHG reduction in the longer term is green hydrogen (hydrogen created using renewable energy). Part of our LET strategy is focused on studying the potential role of zero emissions fuels like green hydrogen in our mining operations.

  • Fugitive methane emissions: from our petroleum and coal assets make up 15 per cent of our operational emissions and are among the most technically and economically challenging to reduce. We are investing in research, development and trial projects with partners, such as the CSIRO and the University of San Diego. In our open-cut coal operations, we are working to better measure our emissions as a first step toward effective abatement. We are also collaborating with research institutions to investigate solutions for our underground operations, such as the viability of using methanotrophs (methane eating bacteria) to abate fugitive methane emissions.

 

Footnotes

1 FY2017 baseline will be adjusted for any material acquisitions and divestments based on GHG emissions at the time of the transaction. Carbon offsets will be used as required.
2 
Calculated on a Continuing operations basis. The FY2017 baseline has been adjusted for the divestment of our Onshore US assets to ensure ongoing comparability of performance.

Scope 3 emissions

While reducing our operational emissions is vital, emissions from our value chain (Scope 3 emissions) are significantly higher than those from our own operations. We work with our customers, suppliers and other value chain participants to seek to influence emissions reductions across the life cycle of our products.

By definition, Scope 3 emissions occur from sources that are not owned or controlled by BHP, but by our customers, suppliers and others in our value chain. For some emissions sources, we have the ability to influence our suppliers or other service providers to reduce emissions from their activities. For example, BHP is one of the largest global shippers of bulk commodities. We are working on initiatives to reduce our freight emissions and seek to drive change more broadly within the shipping industry. Find out more about our approach to sustainable shipping.

For other emissions sources, such as the downstream processing of our products, the fact that these emissions occur ‘outside the gate’ makes them more challenging to address. However, we already work directly with our customers to help them improve the productivity and environmental performance of their processes based on the quality characteristics of our products. There is opportunity to build on these relationships to identify strategic opportunities to partner in implementing projects with the potential to achieve more material emissions reductions. Find out more about how we work with our customers to minimise the environmental impacts of their production.

Our approach to addressing Scope 3 emissions is evolving. Find out more in our whitepaper on addressing greenhouse gas emissions beyond our operations (PDF 122 kb).

As we work to develop an integrated product stewardship strategy in FY2020 we intend to look to identify additional opportunities to work with others in our value chain to influence emissions reductions. We also intend to set public goals related to Scope 3 emissions.

These goals will be set consistent with all of the following principles:

  • Risk-based: focused on material risks and opportunities; 
  • Measurable, accountable and time-bound: clearly defined with clear responsibilities for delivery and against which it is possible to measure progress over a defined timeframe;
  • Paris-aligned: support decarbonisation pathways for our products in line with the goals of the Paris Agreement;
  • Collaborative: engage the right partners to support action at the point of operational control;
  • Outcomes-focused: deliver tangible outcomes and value rather than focus only on activity; 
  • Attainable: recognise our stewardship role relating to sold products as compared to the operational control of our managed facilities;
  • Based on consultation: engage with external expert and/or academic parties to inform the development of appropriate goals; 
  • Assured: reporting will be subject to external verification and assurance.
 

Performance

The most significant contributions to Scope 3 emissions in our value chain come from the downstream processing and use of our products, in particular emissions emanating from the steelmaking process (the processing and use of our iron ore and metallurgical coal). In FY2019 emissions associated with the processing of our non-fossil fuel commodities (iron ore to steel; copper concentrate and cathode to copper wire) were 305 million tonnes of CO2-e. Emissions associated with the use of our fossil fuel commodities (metallurgical and energy coal, oil and gas) were 233 million tonnes of CO2-e.


Scope 3 GHG emissions 1 2

   Scope 3 emissions (million tonnes CO2-e)
Scope 3 category FY2019  FY2018
Upstream
 
Purchased goods and services (including capital goods)  17.3   8.2
Fuel and energy related activities  1.3  1.4
Upstream transportation and distribution3              3.6 3.6
Business travel 0.1 0.1
Employee commuting   <0.1  <0.1
Downstream    
Downstream transportation and distribution 4.0  5.0
Processing of sold products 304.7  322.6
– Iron ore to steel  299.6 317.4
– Copper to copper wire 5.1  5.2
 Use of sold products  232.7 253.8
 – Metallurgical coal  111.4  112.3
 – Energy coal 67.0
71.0
 – Natural gas  28.3
36.4
 – Crude oil and condensates6 23.3
29.6
 – Natural gas liquids 2.8 
4.5
Investments (i.e. our non-operated assets)
3.1
1.7

Scope 3 emissions reporting necessarily requires a degree of overlap in reporting boundaries due to our involvement at multiple points in the life cycle of the commodities we produce and consume. A significant example of this is that Scope 3 emissions reported under the ‘Processing of sold products’ category in the table above include the processing of our iron ore to steel. This third party activity also consumes metallurgical coal as an input, a portion of which is produced by us. For reporting purposes, we account for Scope 3 emissions from combustion of metallurgical coal with all other fossil fuels under the ‘Use of sold products’ category, such that a portion of metallurgical coal emissions is accounted for under two categories.

This is an expected outcome of emissions reporting between the different scopes defined under standard GHG accounting practices and is not considered to detract from the overall value of our Scope 3 emissions disclosure. This double counting means that the emissions reported under each category should not be added up, as to do so would give an inflated total figure.

Our full Scope 3 emissions inventory is available to download as part of our GHG data Excel file (XLSX 80 kb). Details of the calculation methodologies, assumptions and key references used in the preparation of our Scope 3 emissions data can be found in the associated Scope 3 calculation methodology document.

Accelerating the development of carbon capture and storage

We also work in partnership with others to accelerate the development of low emissions technologies with the potential to deliver step-change emissions reductions from the processing and use of our products over a longer time horizon. Carbon capture and storage (CCS) is a key low emissions technology with the potential to play a pivotal role in reducing emissions from industrial processes, such as steel production, as well as emissions from the power sector and from oil and gas production.

While we recognise that progress is required in developing policy frameworks to support the wider deployment of this technology, our CCS investments and partnerships focus on mechanisms to reduce costs and accelerate development timeframes. Our investments include activities aimed at knowledge sharing from commercial-scale projects, development of sectoral deployment roadmaps, and funding for research and development at leading universities and research institutes.

For example, we established the International CCS Knowledge Centre to share lessons from SaskPower's Boundary Dam CCS project in Saskatchewan, Canada. We are working with Peking University and other partners to identify the key policy, technical and economic barriers to CCS deployment in the industrial sector, with a particular focus on the iron and steel industry in China. We have also established a research collaboration between the University of Melbourne, University of Cambridge and Stanford University to support fundamental research into the long-term storage mechanisms of CO2 in sub-surface locations. Find out more about our approach to CCS.

More recently, in March 2019 we committed to invest US$6 million in Carbon Engineering Ltd to progress the development of a ground-breaking technology to reduce carbon emissions by accelerating the development of Direct Air Capture, which removes CO2 from the atmosphere. In June 2019, we also committed to invest US$5 million in CO2CRC, a research project to develop subsurface storage technologies aimed at reducing the cost and environmental footprint of long-term CO2 storage monitoring.

Climate Investment Program

In July 2019, our CEO Andrew Mackenzie announced that BHP’s Board had approved a new Climate Investment Program that will invest in technologies to reduce emissions, and research and development of potential future solutions.

The Program will build on BHP’s existing program of investing  in low emissions technologies and carbon capture and storage.

It includes a total investment amount of US$400 million over five years from FY2020. Investments will target operational emissions reduction and potential reductions of Scope 3 emissions, including from the processing and use of our products.

The Program will target mature and disruptive technologies, designed to achieve near-term emissions outcomes and longer term, higher-risk goals. We expect technology investment to be critical in meeting our short- and medium-term targets for operational emissions reduction, our longer–term goal of operational net-zero emissions and our goals in relation to Scope 3 emissions. The Program will also drive investment in nature-based solutions.

 

Footnotes

Scope 3 refers to all other indirect GHG emissions (not included in Scope 2) from activities across our value chain, including upstream emissions related to the extraction and production of purchased materials and fuels; downstream emissions related to the processing and use of our products; upstream and downstream transportation and distribution; and emissions from our non-operated joint ventures. Scope 3 emissions have been calculated using methodologies consistent with the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. 
2 FY2018 data includes Continuing operations and Discontinued operations (Onshore US assets). FY2019 data includes Discontinued operations (Onshore US) to 31 October 2019 and Continuing operations. 
Includes product transport where freight costs are covered by BHP, for example under Cost and Freight (CFR) or similar terms, as well as purchased transport services for process inputs to our operations. 
4 Product transport where freight costs are not covered by BHP, for example under Free on Board (FOB) or similar terms.
5 All iron ore production is assumed to be processed into steel and all copper production is assumed to be processed into copper wire for end use. Processing of nickel, zinc, gold, silver, ethane and uranium oxide is not currently included, as production volumes are much lower than iron ore and copper, and a large range of possible end uses  apply.Processing/refining of petroleum products is also excluded as these emissions are considered immaterial compared to the end-use product combustion reported  in the ‘Use of sold products’ category.
6 All crude oil and condensates are conservatively assumed to be refined and combusted as diesel.
7 Covers
the Scope 1 and 2 emissions (on an equity basis) from our assets that are owned as a joint venture but not operated by BHP.

Contributing to the global response

Climate change is a global challenge that requires collaboration. We prioritise working with others to enhance the global policy and market response.

Supporting the Paris Agreement

Industry has a key role to play in supporting policy development. We engage with governments and other stakeholders to contribute to the development of an effective, long-term policy framework that can deliver a measured transition to a lower carbon economy.

While we plan for a range of climate scenarios, we continue to advocate for a less than 2°C outcome. We welcomed the Paris Agreement reached at COP21 and believe it provides a solid long-term foundation for further progress in the global response to climate change. The Paris Agreement includes the majority of countries and enables the setting of nationally-determined contributions (NDCs) to address climate change that reflect their specific circumstances. How governments set NDCs or choose to exercise legitimate carryover mechanisms to meet them is for them to determine. However, we advocate for increased ambition from both companies and countries. Our focus is on supporting climate action and longer-term policy frameworks that can deliver the goals of the Paris Agreement while providing stability for business. The Paris Agreement requires governments to increase ambition over time, and we encourage all governments to do this. We are signatories to the UNFCCC ‘Paris Pledge’ which brings together cities, regions, companies and investors in support of the Paris Agreement.

Encouraging development of effective climate and energy policy

We believe an effective policy framework should include a complementary set of measures, including a price on carbon, support for low emissions technology and measures to build resilience. We are a signatory to the World Bank's ‘Putting a Price on Carbon’ statement and a partner in the Carbon Pricing Leadership Coalition, a global initiative that brings together leaders from industry, government, academia and civil society with the goal of putting in place effective carbon pricing policies. Our CEO Andrew Mackenzie has also been appointed to the World Bank’s High-Level Commission on Carbon Pricing and Competitiveness.

We also advocate for a framework of policy settings that will accelerate the deployment of CCS. We are a member of the Global CCS Institute and, the UK Government’s Council on Carbon Capture Usage and Storage.

We contribute to policy reviews throughout our global operating regions. For example, we made submissions in response to the Australian Government’s 2017 Review of Climate Change Policies and Independent Review into the Future Security of the National Electricity Market (Finkel review) and its 2018 Consultation on the operation of the Emissions Reduction Fund Safeguard Mechanism. We also engaged with the Australian Energy Security Board in, both directly and through our industry association memberships, on the design of the National Energy Guarantee.

We believe industry associations have the capacity to play a key role in advancing the development of standards, best practices and constructive policy that are of benefit to members, the economy and society. We also recognise there is increasing stakeholder interest in the nature and role of industry associations and the extent to which the positions of industry associations on key issues are aligned with those of member companies.

In 2017, we completed a review of our membership of those industry associations that hold an active position on climate and energy policy. Our Industry Association Review report, published in December 2017, sets out a list of the material differences between the positions we hold on climate and energy policy and the advocacy positions on climate and energy policy taken by industry associations to which we belong. It also describes the outcomes of the review of our membership of those industry associations. In light of the material difference identified by the review and the narrow range of activities of benefit to BHP from membership, we determined to cease membership of the World Coal Association (WCA). A further review of our industry associations was commenced during 2019. Find out more about our approach to industry associations.

Promoting market mechanisms to reduce global emissions

In addition to measures to reduce our own emissions, we support the development of market mechanisms that reduce global GHG emissions through projects that generate carbon credits.

Our climate change strategy includes a focus on reducing emissions from deforestation through support for REDD+, the UN program for reducing emissions from deforestation and forest degradation.

We are also exploring investments in ‘blue’ carbon, the carbon captured in coastal and marine ecosystems.

For example, in partnership with the International Finance Corporation (IFC) and Conservation International (CI) we developed a first-of-its-kind US$152 million Forests Bond, issued by the IFC in 2016. We provide a price-support mechanism for the bond, which supports the Kasigau Corridor REDD project in Kenya. We also support the Alto Mayo REDD+ project in Peru..

In partnership with CI and Baker McKenzie, in 2017 we launched the Finance for Forests (F4F) initiative, which aims to share our experiences to help encourage replication of these investments and the exploration of other innovative private finance tools to conserve forests and further advance REDD+. Find out more about our approach to REDD+.

Managing risk and opportunity

We recognise the physical and non-physical impacts of climate change may affect our assets, productivity, the markets in which we sell our products and the communities in which we operate. Risks related to the physical impacts of climate change include acute risks resulting from increased severity of extreme weather events and chronic risks resulting from longer-term changes in climate patterns. Non-physical risks arise from a variety of policy, regulatory, legal, technological and market responses to the challenges posed by climate change and the transition to a lower carbon economy.

A broader discussion of our climate-related risk factors and risk management approach is provided as part of our climate-related disclosures in our Annual Report 2019, which are aligned with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).

Adapting to the physical impacts of climate change

We take a robust, risk-based approach to adapting to the physical impacts of climate change. We work with globally recognised agencies to obtain regional analyses of climate science to inform resilience planning at an asset level and improve our understanding of the potential climate vulnerabilities of our operations and communities in which we operate.

Our operations are required to build climate resilience into their activities through compliance with the Our Requirements for Environment and Climate Change standard. We also require new investments to assess and manage risks associated with the forecast physical impacts of climate change. For example, cyclone management is already a critical requirement for our West Australian Iron Ore (WAIO) asset, and maintaining adaptive management practices will allow WAIO to respond to an expected increase in cyclone intensity in the Pilbara region. Another example is provided by our Petroleum business, which has specifically designed severe weather mitigation systems for Floating Production and Storage Offtake vessels (FPSOs). Although the FPSOs are connected to subsea oil and gas infrastructure, they have the capability to disconnect from this infrastructure, and can sail away from impending cyclonic or extreme weather events.

As well as this ongoing business resilience planning, we continue to look at ways we can contribute to community and ecosystem resilience. For example, read about how we are building capacity for climate change adaptation in Trinidad and Tobago (PDF 182 kb).

We recognise the body of scientific knowledge about the potential impacts of climate change is rapidly expanding and continue to review our adaptation approach in light of the latest climate science.

Evaluating the resilience of our portfolio

We consider the impacts of climate change in our strategy process. We recognise the world could respond in a number of different ways to address climate change. We use a broad range of scenarios to consider how divergent policy, technology, market and societal outcomes could impact our portfolio, including low plausibility, extreme shock events. We also continually monitor the macro environment for climate change-related developments that would serve as a call to action for us to reassess the resilience of our portfolio.

Our investment evaluation process includes an assessment of non-quantifiable risks such as those that could impact the people and the environment that underpin our licence to operate. The process has also incorporated market and sector based carbon prices for more than a decade.

Our Climate Change: Portfolio Analysis (2015) and Climate Change: Portfolio Analysis – Views after Paris (2016) reports, describe in more detail how we have used scenario analysis to evaluate the resilience of our portfolio to both an orderly and a more rapid transition to a 2°C world.

We are committed to keeping our stakeholders informed of the potential impact of climate change on our business, and continue to review and consider developing best practices and evolving stakeholder expectations. We will update our portfolio analysis in FY2020, evaluating the potential impacts of a broader range of scenarios, including a transition to well below 2°C.

Disclosure and engagement

Our climate strategy is supported by transparent disclosure and reporting, as well as active engagement with our stakeholders – including investors, policy makers, peer companies and non-governmental organisations.

Climate-related financial disclosures

We were one of the first companies to align our disclosures with the recommendations of the TCFD. We believe the TCFD recommendations represent an important step towards establishing a widely accepted framework for climate-related financial risk disclosure and we have been a firm supporter of this work. Our Vice President of Sustainability and Climate Change is a member of the Task Force. For information on our TCFD-aligned disclosures on climate-related financial risk, refer to our Annual Report 2019.

We are committed to continuing to work with the TCFD and our peers in the resources sector to support the wider adoption of the TCFD recommendations and the development of more effective disclosure practices within the sector.

We have also participated in CDP (formerly the Carbon Disclosure Project) since its inception. In 2018 we received a score of ‘A’ for our submission to the CDP climate change questionnaire. Note however that because of the timing of the CDP disclosure cycle relative to our financial year, this CDP submission relates to our FY2017 financial year. A draft of our 2019 CDP submission, which relates to FY2018, is available here, but has not yet been reviewed and scored by CDP. More information on the topics covered in our CDP submission is available in our 2019 Sustainability and Annual reports. 

Stakeholder engagement

We periodically hold one-on-one and group meetings with investors and their advisers. We also seek input and insight from external experts, such as the BHP Forum on Corporate Responsibility (FCR). The FCR, which is composed of civil society leaders and BHP executives, has played a critical role in the development of our position on climate change. Find out more about the FCR.

Informed by this engagement, we continue to regularly review our approach to climate change in response to emerging scientific knowledge, changes in global climate policy and regulation, developments in low emissions technologies and evolving stakeholder expectations.

Loading the player...