Our approach

In alignment with the recommendations of the GRI, we consider the actual and potential negative and positive impacts of our business in order to determine our material sustainability topics. As part of our assessment, we considered a broad range of inputs, including BHP’s group priority and emerging risks, information recorded in our internal event management system, our social value framework, insights from interviews with senior leaders and subject matter experts across the business. In FY2023 we also considered the sustainability issues OZ Minerals identified as material for disclosure through its materiality assessment in 2022. We seek to ensure our external partners’ and stakeholders’ perspectives inform our assessment by including consideration of issues raised at our Annual General Meetings and investor roundtables, industry sustainability standards and guidance, sustainability-related regulatory focus areas, relevant media articles about our impacts and input from the Forum on Corporate Responsibility. Our material sustainability topics are reviewed by the Sustainability Committee.

BHP has been conducting sustainability materiality assessments for many years and has a well-developed understanding of our organisation’s context. We are actively involved in sector-specific initiatives such as the International Council on Mining and Metals (ICMM) and regularly engage with our stakeholders.

Key inputs for our materiality assessment

Identification of negative impacts

BHP’s event management system is used to identify both actual and potential negative impacts arising from our operations. Specifically, the system is designed to capture events that have or could have resulted in adverse consequences to people (health and safety), the environment or local community, and to our legal, reputational or financial standing. Hazard reporting is also encouraged as a proactive measure to help reduce the likelihood of actual and high potential impacts.

We consider BHP’s material¹ risk profile to identify the potential for negative impacts on our people, the environment or local community and the wider business. This covers threats that have been identified and assessed under our Risk Framework to determine their potential impacts and likelihood. For more information on BHP’s Risk Framework, including our Group Risk Architecture, refer to the BHP Annual Report 2023, Operating and Financial Review 8 - How we manage risk.

We review the actual and potential for negative consequences identified via the event management system and BHP’s material¹ risk profile with a variety of internal and external sources, such as issues raised through industry sustainability standards and benchmark assessments. We also consult with stakeholders, such as the BHP Forum on Corporate Responsibility, via ESG investor round tables and advisory groups and with internal stakeholders via focused discussions.

Assessing the significance of the negative impacts 

The next step is to assess the significance of the actual or potential negative impacts identified. To do this, BHP uses an internal severity rating scale (tiered from one to five by increasing severity), as defined in our mandatory minimum performance requirements for risk management. 

For actual negative impacts, all events recorded in our event management system are assigned a severity level based on their actual or potential impact. We consider actual events from our event management system with a severity level of three or above to be ‘material’ for Global Reporting Initiative (GRI) reporting purposes.

For potential negative impacts, we consider a current material¹ risk to also be ‘material’ for GRI reporting purposes where it satisfies one or both of the following criteria:

1. The maximum foreseeable loss (MFL) if the risk was to materialise is assessed as severity level five (the highest level) and the most significant potential impact of the risk is associated with a sustainability-related category under our Group Risk Architecture. The MFL is the estimated impact to BHP in a worst-case scenario without regard to probability and assuming all risk controls, including insurance and hedging contracts, are ineffective.
2. The level of residual risk is above a certain threshold. This is determined by considering the estimated probability and impact to BHP assuming all risk controls that are in place are operating in accordance with their design.   

Identification and assessment of positive impacts

Our positive impact on the economy, environment and people is captured through our social value framework and social investment. 

The social value framework was developed through extensive consultation and identified the opportunity to build value, beyond minimum compliance, through proactive initiatives and investments that focus on sustaining long-term, mutual value with those who help to enable the realisation of our purpose. We consider our six social value pillars under our social value framework and scorecard are material for reporting. 

Our material sustainability topics

Our materiality assessment informs our sustainability approach and helps to guide the depth of coverage of key topics to be included in our Annual Report in alignment with the GRI Standards. The Board’s Sustainability Committee reviews our materiality assessment approach and the list of material topics each year. In addition, the alignment of the BHP materiality assessment process with the GRI materiality assessment guidance is subject to independent third-party limited assurance as required under our ICMM membership. EY’s assurance statement is available in the BHP Annual Report 2023, Operating and Financial Review 6.17 - Assurance Statement.   

In FY2023, the pillars and themes under our social value framework aligned closely with the events and risks identified as material for GRI reporting purposes through our review of BHP’s event management system and material¹ risk profile. The material sustainability topics shown in the table below are the areas of focus for our sustainability disclosures in BHP Annual Report 2023, Operating and Financial Review 6 - Sustainability. Refer to the section reference in the table for where our most material sustainability topics are covered in the BHP Annual Report 2023, Operating and Financial Review 3 - Sustainability.

The alignment of the material sustainability topics identified through our FY2023 assessment to our social value pillars is shown below. These topics are largely consistent with our FY2022 assessment, with the FY2023 list reduced by six topics overall (security services, market presence, public policy, tax, critical incident risk management and environment which in FY2023 was considered more specifically as biodiversity and water).   

Our material sustainability topics are also broadly aligned with the topics OZ Minerals identified in its 2022 Annual Report and Sustainability Review, with only a small number of OZ Minerals topics not reaching BHP’s assessment materiality threshold, including effluents and waste, air quality and business continuity. We continue to provide disclosure on waste and air quality in our ESG Standards and Databook 2023, with our approach to risk management, including business continuity, detailed in the BHP Annual Report 2023, Operating and Financial Review 8 - Risk management.   

¹ ‘Material’ in this context refers to the materiality of a risk under BHP’s Risk Framework. For information on our Risk Framework refer to the BHP Annual Report 2023, Operating and Financial Review 8 – How we manage risk.