Important notice

A fuller set of our disclosures with respect to when and how we may use offsetting can be found in the BHP Climate Transition Action Plan 2024 and the content below should be read together with our Climate Transition Action Plan (CTAP) 2024. 

Types of carbon credits

We define regulatory carbon credits to mean carbon credits used to offset greenhouse gas (GHG) emissions for regulatory compliance in our operational locations (such as the Safeguard Mechanism in Australia). We define voluntary carbon credits to mean carbon credits generated through projects that reduce or remove GHG emissions outside the scope of regulatory compliance (including Australian Carbon Credit Units not used for regulatory compliance).

Voluntary carbon credits 

We undertake risk-based screening and/or due diligence to test that carbon credits sourced by BHP meet our integrity standards. Our integrity standards are designed to align to global best practice for high-integrity carbon credits (such as the International Carbon Reduction and Offsetting Alliance’s accreditation Code of Best Practice and its list of endorsed carbon crediting standards, and the Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles). We will review and update alignment over time as best practices on carbon credit integrity evolve. Carbon credits we intend to source go through a review process that includes technical, governance, legal and stakeholder aspects, carried out by internal and external subject matter experts. 

We apply the following integrity standards to voluntary carbon credits that we source: 

• Registered under an internationally recognised standard: Independent verification and issuance of voluntary carbon credits and/or satisfaction of national standards for regulatory carbon credits. Carbon credits we source are predominantly issued under Verra’s and Gold Standard’s respective standards. 
• Adheres to a robust GHG emissions reduction accounting methodology: Assurance of the volume of atmospheric carbon that is reduced by a project.
• Demonstrates that the GHG emission reductions are additional: GHG emissions would not have been reduced in the absence of a carbon market. 
• Has a high likelihood of permanence: GHG emissions reduction is ongoing and not reversed (e.g. for forestry projects, the trees are not cut down or destroyed by a natural disaster). 
• Provides robust mitigation against leakage: Does not increase GHG emissions elsewhere (e.g. for forestry projects, another forest area is not destroyed). 
• Demonstrates high environmental and social integrity: Does not cause broader social or environmental harm (e.g. for forestry projects, no community displacement occurs) and appropriate engagement is undertaken with local communities and Indigenous groups, and the findings incorporated into project design (e.g. equitable benefit sharing is defined). 
• Restricts early vintage years: Not retiring credits with a vintage greater than five years to avoid concerns regarding unsophisticated methodologies, non-additionality and inadequate benefit sharing. 

In some cases, the integrity standards of carbon credits may be set and monitored by certain government agencies (e.g. Australian Carbon Credit Units (ACCUs)). Where the principles underpinning their integrity standards are broadly aligned to our own, we do not apply our review process. 

Regulatory carbon credits 

We are subject to the Australian Government’s Safeguard Mechanism, under which facilities we operate are required to maintain their Scope 1 emissions at or below progressively declining legislated baselines (e.g. by surrendering carbon credits from eligible sources). ACCUs can be used to comply with the Safeguard Mechanism. 

The principles underpinning the ACCU Scheme align to our own integrity standards for the carbon credits we source. The Australian Clean Energy Regulator is responsible for approving and issuing ACCUs to projects according to those principles. We do not apply a vintage restriction to purchases of ACCUs because the additionality of projects is rigorously assessed. We anticipate needing to source eligible carbon credits to comply with the Safeguard Mechanism given its applicability to Scope 1 emissions only. 

Although we prioritise structural GHG emissions abatement for our operational GHG emissions, many of the technologies and solutions we need to abate Scope 1 emissions (e.g. electric mining equipment/ vehicles and fugitive methane emissions prevention and mitigation) are not yet ready to be deployed. Accordingly, our need for eligible carbon credits may grow over time to support compliance. 

While the Safeguard Mechanism in Australia is currently the primary regulatory driver of our requirement for regulatory carbon credits, we are subject to other regulations that may require mandatory carbon credit surrender in the future. We will continue to evaluate our approach as the regulatory environment evolves, including in other regions where we operate.