Industry associations - BHP’s approach

Industry associations play a number of roles in civil society. They provide a platform for the sharing of global best practice in the interests of the industry and those with whom the industry works. They develop technical standards and public policy positions. They provide a forum for debate between members of a particular sector in developing those policy positions. They do not, however, and nor should they, represent the views of any single member.

Some associations in which BHP participates are sector specific, such as the Minerals Council of Australia (MCA), which engages in advocacy activities related to the resources sector while also providing a forum to advance industry standards. Some are issue specific, such as the Center for Climate and Energy Solutions (C2ES), a US-based organisation that focuses on reducing greenhouse gas emissions and promoting clean energy. We also participate in global associations that seek to advance industry environmental, social and workplace standards, such as the International Council on Mining and Metals (ICMM).

Industry associations perform a number of functions that can lead to better outcomes on policy, practice and standards for the sector. By bringing together the combined technical expertise and experience of members in areas such as safety, health and environment, the ICMM, for example, adopts a leadership position on sustainable development in the resources sector. Similarly, the MCA makes an important contribution to Australian industry practice in areas including health and safety, water accounting, land use and workforce diversity.

We have long held the view that active participation in industry associations provides a leadership opportunity. We believe that by working within associations, we can, with other like-minded members, seek to exert a positive influence on the industry as a whole. This does not mean, however, that we will always agree with every position or approach that every industry association to which we belong adopts on every issue. This is particularly the case where the association’s membership is large and the mandate is broad, covering a wide range of issues.

The role of each member of an association is to articulate its view in a clear and constructive way, and to seek to influence the association through free and open debate. This is certainly how we see BHP’s role within the industry associations to which we belong - both in Australia and globally. It is not the role of any association to represent BHP and there are times when our views are not aligned. We keep under review our alignment with, and membership of, industry associations. We also communicate our own views directly, through submissions, media commentary, speeches, reports and other engagements.

Finding effective solutions to complex challenges requires a transparent exchange of diverse views. At BHP, we believe that transparency is pivotal to making more informed decisions. We remain committed to sharing our views.

BHP keeps under regular review its alignment with the climate and energy policy positions taken by industry associations on matters of significance to BHP. The sections below provide further information on our review processes.

2017 industry association review

In September 2017, BHP committed to publish (by 31 December 2017):

a list of the material differences between the positions BHP holds on climate and energy policy, and the advocacy positions on climate and energy policy taken by industry associations to which BHP belongs; and
the outcomes of BHP’s current review of its membership of those industry associations.

The report setting out how we met these commitments can be accessed via the link below:

BHP Industry Association Review (PDF 177 kb)

2017 industry association review: update

As part of the Industry association review, BHP committed to make determinations in relation to our membership of the US Chamber of Commerce and the World Coal Association by 31 March 2018. Information on these determinations can be found here.

2018 industry association review

Our 2017 review identified four material differences between BHP and the Chamber on climate and energy policy. These differences relate to the policy areas of: emissions reduction targets; the Paris Agreement; the goal of restricting global warming to 2°C; and putting a price on carbon.

In March 2018, we determined that, due to the broader benefits BHP receives from membership, we would remain a member of the Chamber, subject to a number of actions. One of these actions included keeping our membership of the Chamber under review. We also accepted the invitation of the Chamber to join its Energy and Environment Committee.

Our 2018 review concluded that the US Chamber has largely refrained from policy activity or advocacy in relation to the differences identified, consistent with Principle 3 of our Industry Association Principles. Our review also found that BHP continues to receive benefit from the broader activities of the Chamber.

On April 8, 2019, the Chamber published a new climate change statement. We believe the statement represents an enhancement to the Chamber’s approach to climate change and has the potential to make a constructive contribution to policy discussion.

Based on the findings of our 2018 review and the Chamber’s new climate change statement, we have decided to remain a member of the Chamber at this time, subject to a number of actions. These actions will include: monitoring the Chamber’s ongoing advocacy approach for alignment with its new statement; continuing to expect that the Chamber will refrain from policy activity or advocacy on issues where no broad industry consensus exists; and keeping our membership of the Chamber under review.

2019 industry association review

The report outlining the findings and outcomes of BHP’s 2019 industry association review can be accessed via the link below:

BHP 2019 Industry Association Review (PDF 241 kb)

An earlier update that BHP published on its 2019 industry association review processes can be found here.

2019 industry association review: update

BHP published its 2019 industry association review in December 2019. This review made a number of findings in relation to the New South Wales Minerals Council (NSWMC). Specifically, the review identified one material difference with the NSWMC (relating to Balancing the Energy Trilemma), and found that BHP derives a moderate level of benefit from the broader activities of the NSWMC.

During the course of the review, the NSWMC published a new Climate Change, Energy and Emissions Policy statement. This statement supports the Paris Agreement, and acknowledges the importance of having an integrated climate and energy policy.

In light of the aligned nature of this new statement with BHP’s position, and the broader benefits the Company receives from its membership, BHP determined in December to remain a member of the NSWMC. However, BHP committed to conduct a further review of its membership of the NSWMC no later than 30 April 2020.

Since December 2019, BHP has engaged regularly with the NSWMC on the findings of the 2019 industry association review. BHP has also reviewed public statements made by the NSWMC that relate to climate and energy policy. Based on this engagement and review, and taking into account the assurances given to the Company by the NSWMC, BHP has concluded that the NSWMC has adhered to its new climate change statement and has not undertaken advocacy that is inconsistent with BHP’s core climate and energy policy positions. While some stakeholders have identified concerns with the NSWMC’s position on state planning approvals, planning regulation does not directly relate to BHP’s positions as outlined in the 2019 Industry Association Review. BHP will work with the NSWMC to ensure that any advocacy on planning approvals continues to be neutral as to the commodity or activity associated with planning regulation.

Separate to the issue of climate change, the NSWMC has been very active in the resource sector’s response to the COVID-19 pandemic. This has included working with governments to determine how the sector can best protect the health and safety of workers and host communities, while maintaining the essential role the sector plays in the Australian economy. This work, and that of other state-based and national associations, has resulted in a set of National Protocols that now underpins BHP’s operations in Australia. The NSWMC has also:

played a role in helping the sector address supply chain challenges arising from the pandemic;
undertaken a community awareness program to highlight the importance of mining to the economy and the actions the sector is taking to maintain the health and safety of its workforce and host communities; and
bolstered the capacity of smaller companies by providing necessary legal and medical information, and facilitating communication with the state government.

BHP has, necessarily, had regard to the role played by the NSWMC on the COVID-19 response, which has been of significant value to the Company and host communities.

Taking account of these considerations, BHP has determined at this time to remain a member of the NSWMC. BHP will continue to engage with the NSWMC to ensure its new climate change policy statement is reflected in its policy advocacy. If BHP identifies any material deviations in the climate and energy policy advocacy of the NSWMC, the Company will immediately review its membership of the association. BHP’s membership of the NSWMC will continue to be guided by the Company’s principles for participating in industry associations, and will be covered by the broader enhancements BHP is making to its association governance processes as previously announced. BHP will also be encouraging the NSWMC to consider what additional actions the sector can take, in terms of both positive advocacy and operational enhancements, to help Australia achieve its commitments under the Paris Agreement.

As previously flagged, BHP is currently undertaking a broader consultation process to understand stakeholder perspectives on the 2019 industry association review, and to explore how the Company could further enhance its overall approach to membership of industry associations. An update on this consultation process will be provided in due course.

(UK Corporate Governance Code, provision 4, six-month status report)

At the BHP Annual General Meetings (AGMs) held in London and Sydney on 17 October 2019 and 7 November 2019, respectively, resolution 22 (a shareholder-requisitioned resolution to suspend memberships of industry associations that are involved in lobbying inconsistent with the goals of the Paris Agreement) received the support of 27 per cent of votes cast.

Following the AGMs, BHP has undertaken a range of consultations with shareholders in relation to the subject matter of resolution 22. This included:

In December 2019 the then CEO, Andrew Mackenzie, met with a range of investors, all but one of which had voted in favour of resolution 22. Mr Mackenzie discussed BHP’s approach to industry associations and received direct feedback on the reasons why these investors had supported the resolution.
In January 2020, BHP provided investors in Sydney, Melbourne, London, Edinburgh and Amsterdam with detailed briefings on the findings and outcomes of the 2019 industry association review (which was released on 12 December 2019).
In March 2020, BHP commenced a global engagement and dialogue process with stakeholders (including investors in Australia and the United Kingdom) to explore how the Company could further enhance its overall approach to industry associations.

The key messages received from shareholders include:

Investors acknowledged, in a general sense, that industry associations can play an important role in building the capacity of member companies and advocating in public policy debates.
Investors re-emphasised the importance of alignment between companies and the industry associations of which they are members on key climate and energy policy positions. Some investors noted that if an association cannot reach consensus on an aspect of climate and energy policy it should remain silent. Other investors maintained that associations should be required to advocate proactively in favour of policies that would achieve the goals of the Paris Agreement.
Investors were supportive of efforts to provide greater transparency of industry association advocacy. BHP’s industry association review process was seen as useful in this regard.

BHP is continuing to engage with stakeholders on how the Company can enhance its overall approach to industry associations. An update on this consultation process will be provided in due course.

BHP is a member of industry associations in Australia and globally. We believe associations can perform a number of functions that can lead to better outcomes on policy, practice and standards.

Following the release of our 2019 industry association review, we indicated we would continue to engage with stakeholders to understand their perspectives on the review, and to explore how we could further enhance our overall approach to our membership of industry associations.

BHP will be undertaking this engagement over the coming months. We will engage with a range of stakeholders, including investors, civil society groups, community groups and industry associations.