Climate change is a material governance and strategic issue and is routinely on the Board agenda, including as part of strategy discussions, portfolio reviews and investment decisions, risk management oversight and monitoring, and performance against our commitments. The Sustainability Committee assists the Board in overseeing the Group’s climate change performance and governance responsibilities, and the Risk and Audit Committee assists the Board with the oversight of climate-related risk management, although the Board retains overall accountability for BHP’s risk profile.
During FY2020, the Board undertook a deep dive relating to climate change and strategy. This included discussions about new climate change scenarios and on relative commodity attractiveness, including a 1.5°C scenario and a Climate Crisis scenario. Following detailed discussions by the Executive Leadership Team (ELT), the Sustainability Committee and the Board during FY2020, in August 2020 the Board approved our medium-term target, Scope 3 emissions goals and the strengthening of links between executive remuneration and climate-related performance measures, and noted the Carbon Offset strategy.
The Board strengthened the link between executive remuneration and delivery of our climate change strategy, with performance against operational emissions and value chain measures now representing 10 per cent of the Cash and Deferred Plan (CDP) scorecard, which is significantly higher than in previous years.
The 10 per cent climate change component includes these key measures:
- Reductions in Scope 1 and Scope 2 operational greenhouse gas (GHG) emissions.
- Short and medium-term actions to reduce operational GHG emissions on the pathway to net-zero emissions.
- Short and medium-term actions to address value chain (Scope 3) GHG emissions.
Below the level of the Board, key management decisions are made by the CEO and management, in accordance with their delegated authority. The ELT are held to account for a range of measures including climate-related performance, and these measures are cascaded through the organisation.