BHP, the world’s biggest mining company, faces a knife-edge vote on its climate transition action plan at this week’s annual meeting with some big shareholders debating whether to support a strategy they feel does not go far enough.
The Anglo-Australian group is giving investors a “say on climate” vote at annual meetings in London on Thursday and Melbourne next month. Although the result will not be binding on BHP management, defeat would send a strong message to the miner that it needs to do more.
Three top 30 shareholders told the Financial Times they had concerns about the plan and BHP’s emissions reduction targets, which the Transition Pathway Initiative, a leading corporate climate action benchmark, said were not aligned with the goal of limiting global warming to 1.5C.
One shareholder said they had yet to make a decision, but predicted that the vote would be “quite split”. He said BHP’s 2030 targets to cut operational emissions by at least 30 per cent from 2020 levels were “not stretching enough”.
“The challenge is what signal does the vote communicate to the company? You can say ‘if you are not aligned with Paris, I cannot support your transition plans’. But that treats the more progressive companies and the laggards in the same way,” he said. “Do we say the plan is not good enough or do we acknowledge they are trying to make progress?”
Another top 30 investor declined to disclose how they planned to vote but hinted they also had concerns. “We are assessing say-on-climate votes primarily with regards to science, rather than the relative peer landscape,” she added.
A third top 30 shareholder said they were happy the plan was going to be put to a vote but added that BHP needed to ensure the strategy was “appropriate and executed efficiently”.
The UK’s Local Authority Pension Fund Forum, whose pension fund members manage about £300bn in assets, last week recommended a vote against the plan, as did Pirc, an adviser to big shareholders.
Glass Lewis, the influential proxy adviser, has also recommended clients vote against the plan, expressing concerns over whether it is aligned with the 2015 Paris agreement on climate change.
It also said the miner’s plan to tackle so-called Scope 3 emissions of its products, particularly steelmaking ingredient iron ore, were somewhat limited.
BHP is insisting all its shipping and suppliers have net zero emissions by 2050 but not its steelmaking customers in Asia. Instead, the miner plans to support its steelmaking clients to develop technologies and pathways capable of reducing emissions intensity by 30 per cent.
Other shareholders were more supportive, with Norges Bank Investment Management, a top five shareholder, saying it will back the plan. ISS, another proxy voting adviser, has also come out in support of the plan as has the Australian Council of Superannuation Investors.
Another top 30 shareholder said he also planned to vote in favour. “It’s not perfect but a good first step. We are supporting but I’m aware some aren’t happy,” he said.
Speaking at last week’s FT Mining Summit, BHP’s chief executive Mike Henry defended the plan, saying it was “really ambitious”.
“We understand how we are going to go about doing it. We have costings sitting behind some of the key initiatives like Scope 1 and Scope 2, and we are working really hard with others in the supply chain to enable steelmaking decarbonisation, but it is a journey,” he said.
In a statement BHP said: “We believe that shareholders and other stakeholders benefit from greater disclosure and ambition, which the climate transition action plan delivers”.
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