ships, cargo, port, sea

Value chain sustainability

Our role as a supplier and a customer means it is important we have a coordinated and integrated approach to sustainability for our value chain. We strive to work with our customers, suppliers and other stakeholders in the value chain to create social value through sustainable practices across the full life cycle of our products.

Our ambition

In June 2022, we launched our social value scorecard with 2030 goals, metrics and milestones. We believe it will enhance our opportunity to run our business in a way that delivers long-term, sustainable value to BHP, our shareholders and the broader community.  

Elements of our 2030 goals, metrics and short-term milestones include a focus on value chain sustainability, such as responsible supply chains and decarbonisation. For more information refer to the Sustainability approach webpage.  

Our approach and position

BHP takes a systems approach to value chain sustainability, designed to assess and work with others to improve the sustainability impacts of our upstream supply chains, inbound and outbound logistics, and our products as they move through extraction, processing and use.  

We broadly categorise value chain sustainability as:  

  • Responsible sourcing – integration of sustainability considerations into procurement and logistics in our inbound supply chain and shipping 
  • Process stewardship – meeting the responsible production and sourcing expectations of the market across our operated assets  
  • Product stewardship – influencing the sustainability performance of our downstream value chain where we do not have operational control  

Our sustainability standards strategy defines our pathway for the implementation of responsible mining and sourcing standards. The strategy is focused on the foundations needed to enable a more efficient adoption of standards to better position BHP’s participation in the sustainability standards landscape.  

The standards that form part of our strategy are:  

  • the Copper Mark  
  • the London Metal Exchange (LME) Policy on Responsible Sourcing of LME-Listed Brands  
  • the International Council for Mining and Metals (ICMM) Mining Principles and associated Performance Expectations
  • the Global Industry Standard on Tailings Management 
  • Towards Sustainable Mining (TSM)  

We recognise the importance of engaging in the sustainability standards ecosystem and we support simplification of the standards landscape and convergence of standards. Integrating multiple global and commodity-specific standards is a complex task. In FY2023, we socialised our approach to standards and external engagement with the Forum on Corporate Responsibility. We also worked on standards development in collaboration with industry associations, standards bodies, commodity exchanges and industry schemes, such as the ICMM, TSM The Copper Mark, ResponsibleSteel, the LME and the OECD. This included emphasising the importance of harmonising standards to improve the focus on effective implementation and comparability between companies’ disclosures about their performance. We expect to continue our work with the standards ecosystem in FY2024, to further improve harmonisation of the standards landscape. 

 

Value chain sustainability

  • Responsible sourcing
    We encourage the suppliers we work with to put sustainability at the heart of their business. The supply chain for our global operations includes skilled labour, miscellaneous services and supply of raw, direct and indirect materials. For procured goods and services, we engage our suppliers through a commercial framework that is aligned with Our Charter values and our ethical practices. 

    We are focused on how we can support suppliers and service providers to adopt sustainable business standards in health, safety, human rights, anti-corruption, environmental protection and climate-related measures that are in line with our own. Contractors working at our operated assets are required to comply with our health, safety and environment (HSE) standards. We also look for opportunities to prevent and minimise adverse safety, health, human rights, environmental and climate impacts in our value chain.  

    We manage our relationships through relevant contractual arrangements, applicable regulatory frameworks, Our Charter, Our Code of Conduct and the Our Requirements standards. The Our Requirements for Supply standard provides the framework that our suppliers of non-traded goods and services must comply with to satisfy our HSE and business conduct minimum requirements. Non-traded goods and services are all goods and services that are not part of BHP’s finished product portfolio, for example, raw materials and associated supporting services (such as export shipment).  

    We take a collaborative and risk-based approach in managing our supply chains, which incorporates considerations such as geography, industry and the commercial relationship. If required, we engage with suppliers in relation to applicable standards throughout the relationship. We also support suppliers from communities where we operate to help them meet our standards, build their capabilities and generate local employment. 

    Through our Ethical Supply Chain and Transparency program, we take a risk-based approach to managing modern slavery risks in our supply chain and conducting due-diligence. We seek to continuously improve how we operationalise our responsibility to respect human rights and understand and manage related risks in our operations and supply chains. For more information refer to BHP’s annual Modern Slavery Statement.  
  • Sustainability standards performance
    At BHP, we are committed to a high level of sustainability performance at our operated assets, as well as seeking to influence the sustainability performance of our downstream customers in the value chain. We support industry association programs and other initiatives that bring together participants in a product’s life cycle to improve sustainability performance. Our participation in these programs is aimed at ensuring the standards and thresholds are meaningful and drive a fundamental change in the industry.  

    Our Chilean operations Escondida and Spence and Olympic Dam in Australia maintained full accreditation against The Copper Mark during FY2023 (following a provisional award in FY2022) to recognise their responsible production practices. The Copper Mark is a voluntary assurance framework that independently assesses participants against 32 performance criteria across environmental, social and governance dimensions.  

    Nickel West, Olympic Dam, WAIO and BMA completed independent third-party verification of self-assessments against the ICMM Mining Principles and associated Performance Expectations. The ICMM Mining Principles require member companies to conduct a prioritisation process to determine which assets will be subject to third-party validation across a three-year cycle. All of BHP’s long-term operated assets (excluding NSW Energy Coal and acquired OZ Minerals assets) have completed self-assessments against the ICMM Mining Principles and the associated Performance Expectations and the external validation sequence has been determined in consideration of commitments made by BHP to other standards, to enable operational efficiencies. 

    For more information on the ICMM Mining Principles Assurance and Validation requirements refer to the ICMM website. To view our current assurance statements, refer to the ‘Disclosure’ section below. 

    We disclose aspects of our sustainability performance through the LMEpassport, which is the LME’s digital credentials register to enable companies that trade LME-listed brands to disclose their sustainability metrics and certifications at corporate, asset and brand levels. BHP has added information related to our copper and nickel LME-registered products from Olympic Dam, Escondida, Pampa Norte and Nickel West.  

    To support continuous improvement in environmental performance, each of our operated assets is required to have an Environmental Management System (EMS) that aligns with ISO14001 standards and set target environmental outcomes for land, biodiversity, air and water resources that are consistent with the assessed risks and potential impacts. Target environmental outcomes are required to be approved by the relevant Asset President or equivalent and included in the life of asset plan. Verification of the EMS is either via ISO14001 certification, for those sites that currently hold ISO14001 certification, or internal assurance processes. For more information refer to the Environment webpage
  • Product stewardship
    BHP encourages the responsible design, use, reuse, recycling and disposal of our products throughout our value chain, in line with the ICMM Mining Principles. 

    For our marketed products, our Sales and Marketing team works to maintain compliance with all product regulatory requirements in relevant markets. This includes assessing the hazards of the products of mining according to the United Nations Globally Harmonised System of Hazard Classification and Labelling or equivalent relevant regulatory systems and communicating through safety data sheets and labelling as appropriate. 

    Where possible, BHP works directly with those involved in the processing and use of our products to improve environmental performance throughout the value chain and to promote the sustainable use of our products. For example, we work with individual customers to design and test raw material blends that optimise environmental performance. We also collaborate on research with customers, industry bodies and academia to identify sustainable product and process improvements.  

    We also continue to identify sustainability-related opportunities in BHP’s value chain.  

    Against a backdrop of emerging regulations and standards globally, we see product traceability as a key enabler to help future-proof our supply chains. 

    In FY2023, we engaged with our customers, downstream partners, industry experts and technology partners to define a multi-year product traceability strategy. The strategy builds on BHP’s responsible supply chain objectives and is focused on partnering with multi-stakeholder alliances to shape the transparency and traceability ecosystem and building the foundations needed to enable efficient adoption of emerging standards and regulations. 

    While the strategy has been developed based on existing and likely future regulatory and customer requirements, we will continue to actively monitor and respond to new developments within the traceability landscape. 

    In addition, circular economy principles are an increasingly critical consideration for building sustainable supply chains in relation to our commodities that meet growing demand for our products, support goals to reduce greenhouse gas emissions and minimise the impact of mining and downstream processing on the environments and communities where we operate. Across the business, we are working to identify opportunities that leverage our capabilities to create solutions that can contribute towards a circular economy. 

    We recognise the importance of supporting the climate transition in our value chain. In 2020, BHP set Scope 3 emissions goals for 2030 to support decarbonisation for processing of our steelmaking products and maritime transportation of our products. In 2021, we added to these goals with a long-term goal and targets for Scope 3, supported by an action plan of working with industry, including our customers and suppliers, to achieve sectoral decarbonisation. Refer to the Climate change webpage for our goals and targets for Scope 3 emissions. As a producer of materials that are essential building blocks of decarbonisation, BHP is supporting the global transition to a more sustainable development trajectory by evolving the solutions we provide to our customers and the solutions we procure from our suppliers and partners. 

    Our interest in the value chain also extends to water use. BHP has potential exposure to water-related risks across the value chain and climate change may increase our future exposure. Customers and suppliers may be exposed to areas of ‘high’ to ‘extremely high’ water stress and we must understand these factors and respond to the challenges, working with our customers and suppliers. 
  • Metals and minerals due diligence
    Our Responsible Minerals Program is our minerals and metals supply chain due diligence management system, which is aligned with the OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD Guidance). The program requires fit-for-purpose due diligence with respect to the upstream minerals and metals supply chains for our operated assets and third-party trading activities.  

    The program prioritises due diligence over suppliers of minerals and metals where our operated assets or the inbound supply chain for the products those assets produce have any extraction, transportation or trade association with a conflict-affected and/or high-risk area. The program applies exclusively to suppliers selling minerals and/or metals directly into our operated assets that will physically form a part of our products or selling minerals and/or metals to BHP that BHP intends to market to a third party. 

    The program adopts the five-step framework for risk-based due diligence in alignment with Annex I of the OECD Guidance. The Annex I five step framework involves:  

     

    1. Establishing strong company management systems  
    2. Identifying and assessing risk in the minerals and metals supply chain
    3. Designing and implementing a strategy to respond to identified risks
    4. Carrying out independent audits at identified points in the supply chain, where applicable
    5. Reporting on minerals and metals supply chain due diligence  

    The risks BHP considers in this due diligence include the Annex II risks under the OECD Guidance, together with other risks identified by BHP. Annex II risks include any form of forced or compulsory labour, the worst forms of child labour and other severe human rights violations, such as widespread sexual violence.  

    In determining conflict-affected and high-risk areas, BHP considers TDI Sustainability’s Conflict-Affected and High-Risk Areas (CAHRA) list, as a comprehensive list of CAHRAs.  

    We commenced implementation of the Responsible Minerals Program in FY2023, including the publication of our Responsible Minerals Policy. Our first annual Responsible Minerals Program due diligence report covers all minerals and metals purchased by BHP in FY2023, and details due diligence undertaken since the Responsible Minerals Program commenced in September 2022. In FY2024, we underwent an independent assessment against the Joint Due Diligence Standard for Copper, Lead, Molybdenum, Nickel and Zinc for applicable sites. The Joint Due Diligence Standard was established by The Copper Mark in collaboration with relevant metals associations to promote responsible minerals and metals supply chains for these commodities, aligned with the OECD Guidance. A copy of the assessment assurance report can be found here for Nickel West, Olympic Dam, Escondida and Spence

  • Disclosure
  • Risk