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At BHP, we continually monitor and analyse the potential impacts of climate-related risks and opportunities on our Company.

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 and opportunities arise from a variety of policy, 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, which are aligned with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).

Effectively managing the potential impacts of climate-related risks and opportunities is an important part of our commitment to long-term shareholder value. We consider the impacts of climate change in our strategy process. 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.

We recognise the world could respond in a number of different ways to address climate change. We therefor 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 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. These reports have been of considerable interest to stakeholders since they were launched.

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. Following the release of the TCFD recommendations, we also continue to review our approach to the public disclosure of this work.

Our approach to climate change extends beyond consideration of climate risk and portfolio resilience. Our integrated climate strategy also focuses on reducing our operational greenhouse gas (GHG) emissions, investing in low emissions technologies, promoting product stewardship, and working with others to enhance the global policy and market response. More information on each element of our strategy is available at bhp.com/climate.

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