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Our position on climate change

We accept 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.

We believe the world must pursue the twin objectives of limiting climate change to the lower end of the IPCC emission scenarios in line with current international agreements, while providing access to reliable and affordable energy to support economic development and improved living standards. We do not prioritise one of these objectives over the other – both are essential to sustainable development.

Under all current plausible scenarios, fossil fuels will continue to be a significant part of the energy mix for decades. Therefore, an acceleration of effort to drive energy efficiency, develop and deploy low-emissions technology and adapt to the impacts of climate change is needed. We believe there should be a price on carbon, implemented in a way that addresses competitiveness concerns and achieves lowest cost emissions reductions.

In September 2015, we released our Climate Change: Portfolio Analysis, to provide insight into our approach to scenario analysis and the potential impacts on our portfolio of a shift to a 2 degree world. 

Following the significant shifts we have seen in the last 12 months, we have issued a timely new update - Climate Change: Portfolio Analysis – ‘Views after Paris’- which provides insight into how we track signals in the external environment, to provide an indication of which scenarios are becoming more or less dominant. 

Our approach

BHP’s strategy is tied to economic growth in both emerging and developed economies and sustainable development requires an effective response to climate change. As a result, responding to climate change is a priority Board governance and strategic issue for our Company. Management has primary responsibility for the design and implementation of an effective position on, and response to, climate change. Our strategy is underpinned by active engagement with our stakeholders, including investors, policy makers, peer companies and non-government organisations.

As a major producer and consumer of fossil fuels, we recognise our responsibility to take action by focusing on reducing our greenhouse gas (GHG) emissions; increasing our preparedness for climate impacts; and working with others, including academia, industry and governments, to enhance the global response to climate change.

In December 2015, we welcomed the agreement reached at the United Nations Framework Convention on Climate Change (UNFCCC) 21st Conference of the Parties (COP21) in Paris to hold the increase in the global average temperature to well below two degrees Celsius and to pursue efforts to limit the temperature increase to 1.5 degrees Celsius. Together with a range of businesses and other non-state entities, we demonstrated our support by signing the UNFCCC Paris Pledge. 

Industry has a key role to play in climate change policy development by working with governments and other stakeholders to inform the development of an effective, long-term policy framework that delivers a measured transition to a lower emissions economy. 

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. 

Industry associations are an important forum for discussion and debate of key industry issues, including climate change policy, and are most effective when they allow for discussion of a wide range of views. It is not the role of industry associations to represent BHP alone and there are times when our perspectives may not be aligned. However, our role is to share our position in a clear way that enables us to have a constructive influence within our industry.  

We regularly seek to share lessons learned and identify solutions that we believe can drive emissions reductions at the lowest cost. BHP has hosted several policy roundtables, including a meeting of the International Emissions Trading Association in 2016, bringing cross-sectoral business groups together to discuss different ways that business and government can address climate change. Together with a group of public, private and social leaders, we joined the Energy Transitions Commission, which ‘aims to identify pathways for change in our energy systems to ensure both better growth and a better climate’. BHP is a signatory to the World Bank’s “Putting a Price on Carbon” statement, and we are a member of the World Bank’s Carbon Pricing Leadership Coalition. 

With seven other major Australian companies representing around 12 per cent of the country’s GHG emissions, we signed the CEO Statement on Business, Climate Change and the Paris Negotiations calling for a positive outcome at COP21. We have an ongoing commitment to transparent and open communications. 

Our extensive engagement program with investors, government and the broader society includes our voluntary submission to CDP. This commitment has resulted in a significant improvement in our CDP transparency score since FY2013. Reflecting this, BHP was included in the Climate Disclosure Leadership Index in 2015, with a disclosure score of 99 out of 100.

Our performance

With our FY2017 emissions of 16.3 million tonnes of carbon dioxide equivalent (CO2-e) at 21 per cent below the adjusted FY2006 baseline, we have successfully achieved our ambitious five-year target to keep our absolute GHG emissions below our FY2006 baseline while growing our business.

Numerous individual improvement projects have contributed to this achievement, as well as improvements in productivity and technology, and changes in production profile. Projects tracked since FY2013 as part of our FY2013–FY2017 GHG target achieved more than 975,000 tonnes CO2-e of annualised abatement in FY2017 at our Continuing operations.

Our integrated approach to addressing climate change has four areas of activity: mitigation, adaptation, low-emissions technology and portfolio evaluation. 


Rather than use an intensity metric to define our current Company GHG target (for the period FY2013–FY2017), we set ourselves a challenging goal to limit our overall emissions by keeping our absolute FY2017 GHG emissions below our FY2006 baseline.

Greenhouse gas emissions

As we grow our business, our GHG target encourages us to improve our energy efficiency, increase productivity and implement additional GHG reduction projects across our operations. All our operations are required to identify, evaluate and implement suitable GHG reduction opportunities, including during project design and equipment selection. We focus on addressing material GHG emissions sources at our operations, which may include electricity use, liquid fuel use (predominantly diesel) and fugitive methane. Projects tracked since FY2013 as part of our current GHG target achieved more than 950,000 tonnes CO2-e of annualised abatement in FY2016 at our continuing operations.

We have delivered reductions in GHG emissions by improving operating methods in our North American shale operations. In developing a program to optimise power generator performance across our Eagle Ford-operated drill rigs, the team analysed generator-loading practices and made several recommendations. The pilot study proved a success and the program was applied to all Eagle Ford and Permian-operated rigs. As a result, maintenance costs were reduced, average diesel fuel consumption dropped significantly and greenhouse gas emissions were reduced by 18,000 tonnes CO2-e.

The Company’s total GHG emissions of 18.0 million tonnes of carbon dioxide equivalent (C02-e) in FY2016 is significantly lower than our total GHG emissions in FY2015, primarily as a result of the demerger of South32. When compared to our adjusted baseline, which takes into account the demerger, the Company’s emissions are 13 per cent below FY2006 emissions. We are on track to meet our FY2017 target.

In addition to identifying opportunities within our Company, we also seek to contribute to global GHG emissions reductions. We are currently implementing a strategy to support REDD+ - Reducing Emissions from Deforestation and Forest Degradation


Our assets are long-lived, therefore we must take a robust, risk-based approach to adapting to the physical impacts of climate change. Effective analysis of climate science is critical to informing our resilience planning. We continue to work with the CSIRO (Australia’s national science agency) to obtain regional analyses of climate change science. This informs climate change resilience planning at an asset level, improving our understanding of the material climate vulnerabilities that our operations face. 

There are many opportunities for us to take action now to build climate change resilience into our operations and future investments. It is a requirement for all our operations to do this as part of Our Requirements for Environment and Climate Change standard. We also require new investments to assess and manage risks associated with the forecast impacts of climate change. 

A leading example has been provided by our Western Australia Iron Ore (WAIO) operations. For the Pilbara region, climate conditions are expected to be hotter (both averages and extremes) and drier in coming decades, with higher sea levels along the coast. Tropical cyclones may decrease in number, but are likely to increase in intensity and duration over the same period. WAIO undertook an integrated and system-wide study to identify the climate vulnerabilities in the production system, assess the material climate risks and evaluate the effectiveness of existing controls in the face of the changing climate. Following the study, a Climate Resilience Plan for WAIO was developed. Action Plans will be implemented over the next five years to address the critical strategic priorities.

The most appropriate approach to building climate change resilience will vary depending on the life of the asset, its exposure to climatic factors and its function. In nearly all cases, collaborative approaches with a range of stakeholders will be necessary to ensure we have effective approaches to climate change resilience. We are also looking at ways we can contribute to community and ecosystem resilience outside of business resilience planning.

Find out more about some of the ways we are building capacity for climate change adaptation.

Low-emissions technology

Technology and innovation have the potential to significantly reduce global emissions and enable long-term climate goals to be met. Given that fossil fuels are likely to continue to be a significant part of the energy mix for decades, it is vital that low-emissions technology is available at scale, lower cost and much faster than the usual commercial timeframes to meet the challenge of climate change. We believe industry has a significant collaborative role to play with government, academia and the community to facilitate this necessary step-change.

We have established an integrated strategy that invests across a range of technologies to reduce material emissions in our operations and across our supply chains, including from the use of our products. When evaluating opportunity areas for potential investment, we look at several different factors, including the potential to materially reduce emissions, and the opportunity to use our own skills and expertise to accelerate the change required.

Our roadmap for investment includes developing and demonstrating carbon capture and storage, technologies to reduce fugitive methane emissions from coal and petroleum operations, battery storage and high-efficiency/low-emissions power generation and transportation. Read more on our carbon capture and storage partnerships.

BHP’s approach to climate change has always been underpinned by engagement, and in October 2015, BHP entered into a partnership with GE Ecomagination to jointly assess opportunities for significant emissions reductions in our business and within our supply chain. The partnership is an example of how industry can work together to identify potential solutions to this critical issue.

Read more on our commitment to the Lakeland Solar and Storage project.

Portfolio evaluation

We continue to identify and assess the impacts of climate change on our portfolio. Our corporate planning process uses scenario analysis to encompass a wide spectrum of potential outcomes for key global uncertainties. This planning starts with the construction of a central case, a forecast built through an in-depth, bottom-up analysis using rigorous processes and benchmarked with external views. This central case is thoroughly reviewed and endorsed periodically by the Executive Leadership Team and the Board.

Scenarios that describe the different ways the world could evolve beyond our central case allow us to explore potential portfolio discontinuities and opportunities. In our Climate Change: Portfolio Analysis report (released in September 2015), we outlined four different scenarios, each designed to be divergent, plausible and internally consistent. Our four scenarios assess the timing and implementation of various government policies, emission reduction targets and technology developments. In one of the scenarios, we see a more unified focus on limiting climate change, including an orderly transition to a two degree Celsius world. 

We also stress test our portfolio against a shock event that leads to a much more rapid transition to a two degree Celsius world by 2030. This is driven by higher government emission reduction targets and faster technology developments. We include a price on carbon in all scenarios. For our central case, this equates to US$24 per tonne, with a range between US$50 and US$80 per tonne for scenarios that deliver outcomes consistent with a two degree Celsius world.

The analysis highlights that our uniquely diversified portfolio of high-quality, low-cost assets is robust under both an orderly and a more rapid transition to a two degree Celsius world. We also have a strong project pipeline with many capital-efficient growth options that continue to generate high shareholder value in a two degree Celsius world.

While demand continues to grow for most commodities in our two degrees Celsius scenarios, there are winners and losers in our portfolio. Oil and coal are most impacted; however, fossil fuels are still likely to supply the majority of the world’s energy in 2040, even in a two degree Celsius world. Based on our analysis, copper, uranium, potash and gas are predicted to be robust and mitigate potential negative impacts on other commodities, as will higher-grade products in iron ore and metallurgical coal. The analysis shows that our portfolio is highly unlikely to result in assets being ‘stranded’.

Since the release of our Climate Change: Portfolio Analysis we are seeing signs that might indicate a movement to a two degree Celsius world. Some of the relevant themes we are tracking include emerging climate policy (e.g. COP21), low global growth and low carbon energy transition. Following the significant shifts we have seen in the last 12 months, we have also issued  - Climate Change: Portfolio Analysis – ‘Views after Paris’

There will be many risks and opportunities as the world continues to respond to climate change and they will be faced by companies in all sectors, albeit to varying degrees. With the right market settings, including a price on carbon, the greatest opportunities will emerge for those who can produce the lowest cost and most efficient solutions, in line with the expectations of communities and policy makers.

Over BHP’s long history, we have continually demonstrated our ability to reposition ourselves for future growth by divesting those parts of our business that do not align with our strategy or by investing in new commodities where we see a strong long-term growth story.

Our way forward

As a leading global resources company, we have a broad role to play in supporting the transition towards a two degree Celsius world, including the development of low-emissions technology, a commitment to focus on reducing the emissions associated with our operations and to increasing our preparedness for physical climate impacts. We will continue to share our market experience to support governments in delivering the changes in policy and regulation required to successfully address climate change.

To support our commitment to reduce GHG emissions, we are currently developing Company GHG targets for the period after FY2017. Our process will take into account an understanding of GHG forecasts and reduction opportunities, technology options and the expectations of our stakeholders.

In FY2016, we undertook a project to increase our understanding of the GHG emissions in our supply chain (our Scope 3 emissions). The results of this work will enable us to engage more meaningfully with our suppliers and customers, and assist in the identification of material opportunities to reduce GHG emissions.

A key feature of COP21 was the strong support from the investment community, including the announcement of the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TCFD). This industry-led group aims to develop voluntary, consistent climate-related financial risk disclosures that would be useful to lenders, insurers, investors and other stakeholders. The TCFD is chaired by Michael Bloomberg and comprises senior technical representatives from organisations that are both ‘preparers’ and ‘user’ of company disclosures. BHP’s Vice President of Sustainability and Climate Change, Dr Fiona Wild, is a member of the TCFD. We see this as a strong endorsement of the work we have already undertaken. 

As the global investment community seeks greater insight into the strategies being implemented by corporations and governments to manage climate change risk, the nature of effective disclosure will evolve. We believe that disclosure frameworks should focus on relevant, risk-based information that eliminates duplication, is easily understandable and is useful to decision-makers.

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