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Our portfolio analysis and capital alignment

Our updated portfolio analysis demonstrates that our business can continue to thrive over the next 30 years, as the global community takes action to decarbonise, even under a Paris-aligned 1.5°C trajectory.

The world must undergo multiple transitions arising from commitments to reduce GHG emissions. These transitions are complex, multi-faceted and could reasonably be expected to manifest in unique ways across different regions, reflecting heterogeneous local conditions. However, we believe that together they comprise a global transition to a lower-carbon economy that can mitigate the impacts of climate change. We see steps towards these transitions in the emergence of electric mobility and the rapid cost declines of renewable power generation. Global accords such as the Paris Agreement and subsequent government commitments suggest these transitions are likely to accelerate.

The Paris Agreement has set an ambition to pursue efforts to limit global temperature increases to 1.5°C, which will require aggressive action to reduce emissions. Abatement commensurate with limiting temperature increases to 1.5°C would reduce the potential physical impact of climate change on our assets, our employees, our communities and our markets, and potentially generate significant value for our portfolio.

In the BHP Climate Change Report 2020, we described the impact on our business of four divergent scenarios(1) across a range of temperature outcomes, including our Paris-aligned 1.5°C scenario.(2) Our most recent portfolio analysis indicated that under our 1.5°C scenario, the world would need around twice as much steel and copper, and four times as much nickel in the next 30 years as it did in the last 30. Potash demand, required for higher agricultural yields due to land use competition, also grows under that scenario.

Today’s signposts do not yet indicate that the appropriate measures are in place to drive decarbonisation at the pace or scale required to achieve the goals of the Paris Agreement. However, as governments, institutions, companies and society increasingly focus on addressing climate change, the potential for a non-linear transition and the subsequent impact on opportunities and risk increases.

We intend to systematically integrate one or more Paris-aligned scenarios (including 1.5°C scenarios) into our strategy and capital prioritisation processes beginning in FY2022. This will enhance our current approach, in which our 1.5°C scenario is used to inform and test strategic portfolio decisions. See the BHP Climate Transition Action Plan 2021 for more information.

(1) There are inherent limitations with scenario analysis and it is difficult to predict which, if any, of the scenarios might eventuate. Scenarios do not constitute definitive outcomes for us. Scenario analysis relies on assumptions that may or may not be, or prove to be, correct and may or may not eventuate, and scenarios may be impacted by additional factors to the assumptions disclosed
(2) This scenario aligns with the Paris Agreement goals and requires steep global annual emissions reductions, sustained for decades, to stay within a 1.5°C carbon budget. Refer to the BHP Climate Change Report 2020 available at for information about the assumptions, outputs and limitations of our 1.5°C Paris-aligned scenario. 1.5°C is above pre-industrial levels.


Green revenue


Green revenue is intended as a measure of the extent to which products and services contribute to the transition to a green economy.(1) While these contributions will be measured on a range of important indicators (including water conservation, biodiversity or reforestation), much of the discussion about green revenue is focused around the contribution to the transition to renewable energy that is vital for climate change mitigation.

There is no settled methodology for classifying green revenue in the resources sector. In response to increased investor interest in the concept, in FY2021 BHP reviewed potential approaches to classification and measurement of green revenue, starting with consideration of how our products contribute to addressing the challenge of climate change.

We expect many of our commodities to be important to the energy transition. For example, the International Energy Agency’s ‘The Role of Critical Minerals in Clean Energy Transitions’ report(2) highlights the critical role of copper and nickel, and BHP’s 1.5°C scenario(3) indicates that the case for copper, nickel and potash could be even more compelling as the world takes action to decarbonise. Iron ore also fares slightly better under our 1.5oC scenario versus other scenarios, as steel requirements of the energy transition are expected to be considerable.

The most commonly used measure for green revenue is based on end use of products. However, this measure is not straightforward, for two reasons:

  • Identifying the end use of some commodities is challenging. Copper and iron ore, in particular, undergo multiple stages of processing and have a diverse range of end uses.
  • The way in which commodities are produced is not captured by end use measures. However, production methods for the resource sector can in themselves be an important contributor to achieving a green economy. For example, our Chilean copper operated asset at Escondida is on track to have 100 per cent renewable electricity supply by the mid-2020s and source desalinated water for all operational purposes minimising water extraction from sensitive Andean aquifers.

End use may therefore not be the sole appropriate measure of products’ contribution to the energy transition, and other measures (such as how they are produced) may also be useful, and even more appropriate in some circumstances.

In FY2021, we have applied an approach to green revenue based on end use, using nickel and uranium by way of illustration. At this stage, these are the most straightforward of our commodities for which to determine contribution to the energy transition from their end use. In FY2022, we intend to continue to consult with investors, industry and standard setters to explore ways of establishing clear methodologies for classification and measurement of green revenue. We also plan to work with our customers, suppliers and others in our value chain to improve the traceability of our products and the emissions produced by their use.

Battery manufacture contributes to climate change mitigation.(4) Therefore, for illustrative purposes,(5) we have measured the revenue from our sales to battery materials suppliers as green revenue. Seventy-two per cent of BHP’s battery-suitable nickel metal(6) was sold to global battery material suppliers in FY2021.(7) For FY2021, BHP’s green revenue from battery-suitable nickel metal amounts to US$760 million.(8)

Australian uranium is sold for nuclear power generation only, a low-emissions source of electricity, and therefore, also for illustrative purposes, we have measured all revenue from uranium as green revenue. For FY2021, BHP’s green revenue from uranium amounted to US$249 million.


(1) A green economy is defined by the UN Environment Programme as low carbon, resource efficient and socially inclusive. In a green economy, growth in employment and income are driven by public and private investment into such economic activities, infrastructure and assets that allow reduced GHG emissions and pollution, enhanced energy and resource efficiency, and prevention of the loss of biodiversity and ecosystem services.
(2) The Role of Critical Minerals in Clean Energy Transitions – World Energy Outlook Special Report, May 2021.
(3) This scenario aligns with the Paris Agreement goals and requires steep global annual emissions reductions, sustained for decades, to stay within a 1.5°C carbon budget. Refer to the BHP Climate Change Report 2020 for information about the assumptions, outputs and limitations of our 1.5°C Paris-aligned scenario. 1.5°C is above pre-industrial levels.
(4) For example, the EU taxonomy recognises battery manufacture as a significant contributor to climate change mitigation. The EU Taxonomy is a classification system, establishing a list of environmentally sustainable economic activities. Note the EU taxonomy does not presently cover the mining sector.
(5) Recognising that a settled methodology for classifying green revenue in the resources sector has yet to be determined.
(6) Battery-suitable nickel metal is defined as nickel briquettes and nickel powder. It does not include off-spec nickel metal.
(7) Based on percentage, battery-suitable nickel metal sales to battery material suppliers. Where customer’s planned end-use is not known with certainty to be for battery supply, assumptions of usage have been made using historical nickel metal usage for those customers.
(8) Calculated based on gross revenue from battery-suitable nickel metal multiplied by percentage of BHP’s sales of nickel metal to battery material suppliers.