We recognise the importance of investors and other stakeholders being able to understand the potential impacts on BHP’s financial position from climate-related risks (threats and opportunities).  

We have sought to be a leader in terms of climate disclosure. We were one of the first companies to align our climate disclosures with the recommendations of the Task Force on Climate-related Financial Disclosures. 

BHP engaged with investors and other stakeholders in May 2023 on BHP’s climate-related financial disclosures. We listened to the feedback. 

In our Annual Report 2023, we have continued to enhance our climate-related financial disclosures, including those within BHP’s FY2023 Financial Statements. We have aimed to make our disclosures simpler and clearer. We have also brought our climate-related financial statement disclosures together in one place to make them easier to find and understand BHP’s current assessment.   

Please refer to the Sustainability reporting organisational boundary, definitions and disclaimers document for important information about the content below, which is available at the bottom of this page.

We have added a 'Navigating our disclosures' index to our Annual Report 2023

The index sets out each of the TCFD’s recommended disclosures and where our TCFD-aligned disclosures can be found within our Annual Report 2023, as well as where information about progress against our Climate Transition Action Plan 2021 can be found (page 45 of our Annual Report 2023).

We have consolidated climate-related content in Note 16 (Climate change) of our Financial Statements for FY2023

Note 16 (Climate change) of our Financial Statements for FY2023 consolidates climate-related content that in previous years has been included in a number of different notes to the financial statements, including in the basis of preparation, impairment of non-current assets and closure and rehabilitation provision notes (page 162 of our Annual Report 2023). We also describe a range of climate-related risks with potential to impact on BHP’s financial position elsewhere in our Annual Report 2023, including Operating and Financial Review 6.12 – Climate change and 8.1 – Risk factors.

We note that considerable uncertainty remains with respect to identification and assessment of all   potential financial reporting consequences for BHP of climate change and the transition to a low-carbon economy. 

We have continued to enhance the climate-related financial disclosures in BHP's FY2023 Financial Statements

The information in BHP’s FY2023 Financial Statements includes: 

• Confirmation that price-only sensitivities to BHP’s long-term 1.5ºC price outlook¹ indicate (based on BHP’s analysis) that there would not be any impairments for BHP’s iron ore, copper, metallurgical coal, nickel and potash assets under that scenario (page 165 of our Annual Report 2023). 
• Price-only sensitivities for BHP’s metallurgical coal assets, BHP Mitsubishi Alliance (BMA), based on the base case and 1.5ºC scenario price outlooks published in August 2022 by Wood Mackenzie, which includes BHP’s analysis that indicates these price-only sensitivities would not result in any indicative impairment to BMA (page 165 of our Annual Report 2023). 
• Additional disclosure on expenditure on operational decarbonisation and expenditure to support operational and value chain decarbonisation, including quantifying expected operational decarbonisation spend by operated asset over the period to FY2030 (excluding former OZ Minerals Limited assets) (page 164 of our Annual Report 2023).
• Additional information on BHP’s acquisition of carbon credits and approach to offsetting, including expenditure on carbon credits in FY2023 (page 163 of our Annual Report 2023). See further information below.
• Information about BHP’s ongoing consideration of the potential impacts of physical climate-related risks (page 163 of our Annual Report 2023). 

The price-only sensitivities described above assume that all other factors in the asset valuations, such as production and sales volumes, capital and operating expenditures, carbon pricing and the discount rate, remain unchanged from those used in BHP’s FY2023 impairment assessments. They do not attempt to assess all potential financial statement impacts, including impacts on asset valuations, that may arise under BHP’s 1.5°C scenario or Wood Mackenzie’s price outlooks.   Refer to Note 16 (Climate change) of our FY2023 Financial Statements in our Annual Report 2023 for additional important information and assumptions with respect to the price-only sensitivities noted above. 

We have enhanced information on BHP’s acquisition of carbon credits and approach to offsetting

Our operational GHG emission abatement pathway to FY2030 prioritises structural abatement and does not assume the use of carbon credits to meet our medium-term target. However, if our planned abatement projects fail to deliver the expected greenhouse gas (GHG) emission reduction, we retain the flexibility to use high-integrity carbon credits (those that meet our integrity standards) to manage our pathway to FY2030. Looking beyond FY2030, we may purchase and retire high-integrity carbon credits to offset operational GHG emissions that we have determined cannot be entirely avoided due to technological, physical or financial constraints. We are committed to transparently disclosing the carbon credits we use towards meeting the targets and goals we have set as well as our regulatory obligations. Refer to Carbon credits and offsetting for more information about BHP’s approach to offsetting.   

We actively monitor emerging mandatory and voluntary climate-related reporting regimes

In general, our approach is to progressively align our climate-related disclosures with expected future reporting regimes prior to meeting any applicable mandatory regimes once in force. We are monitoring emerging regimes, including the:  

• Australian Government’s proposal for mandatory climate-related financial disclosures in response to the International Sustainability Standards Board’s IFRS S2 Climate-related Disclosures  
• United States Securities and Exchange Commission draft Rule on Enhancement and Standardization of Climate-Related Disclosures for Investors  
• United Kingdom and European Union draft regulations in relation to climate- and sustainability-related due diligence and financial disclosures.

¹ Long-term commodity price outlooks for iron ore, copper, metallurgical coal, nickel and potash under BHP’s 1.5°C scenario, which requires steep global annual emissions reduction, sustained for decades, to stay within a 1.5°C carbon budget. 1.5°C is above pre-industrial levels. For more information about the assumptions, outputs and limitations of our 1.5°C scenario refer to the BHP Climate Change Report 2020 available at bhp.com. We are currently preparing an updated 1.5°C scenario to be completed in FY2024.