BHP is preparing a response to plans to reduce greenhouse gas emissions at its annual shareholder meeting in London next month.
Glass Lewis, an influential proxy adviser, urged clients to vote against the world’s largest mining climate transition action plan, expressing concern about its scope and the combination of its goals with the latest climate science. The plan was launched this month.
“We are not convinced that support for this resolution is needed at this time,” a report sent to investors said.
Companies such as Glass Lewis and Rival Institutional Shareholder Services may be important in voting on matters ranging from executive pay to board nominations because their recommendations are followed by passive investment funds.
BHP, which is listed in London and Sydney, offers a growing number of natural resource companies to tell voters about the climate at the AGM as a way for investors to get feedback on their plans. Other companies that have introduced the resolution include Glencore, Royal Dutch Shell and Rio Tinto.
According to staff, the position taken by Glass Lewis will have an impact across the sector as shareholders are now unlikely to approve the climate plan because they are proposing a vote on the issue.
“Although Glencore, Shell and others were given an easy run with their ‘Climate Speaking’ vote earlier this year, the suggestion suggests that companies will no longer be rewarded for their travel directions and that climate plans will now be evaluated objectively,” said Shareholder Advocacy. Dan Gocher, director of climate and environment at the organization Australasian Center for Corporate Responsibility.
BHP, one of the world’s largest producers of steel ore, has pledged to reduce its direct carbon emissions by at least 30 percent by 2020 over the next 10 years, with a goal of zeroing the net by 2050.
In the case of ‘Scope 3’ emissions – the greenhouse gases emitted in its supply chain and the use of its products – the company insists that all its suppliers will emit passive zero by 2050 but not its steel-making customers in Asia.
Instead, the company plans to help its steel-making clients develop technologies and pathways capable of reducing emissions intensity by 30%. It also aims to reduce emissions intensity by 40 percent in the shipping of its products.
Glass Lewis said it acknowledges BHP’s significant disclosure on climate change and the steps it has taken to reduce its carbon footprint, but there is room for improvement. “For example, it is not clear whether the company’s current goals are science-based,” it said.
It noted that BHP’s emissions reduction targets do not appear to have been attested by outside organizations such as science-based target initiatives, a key standard for corporate climate commitment, or investor-backed groups such as the Transition Pathway Initiative.
“According to TPI’s December 2020 assessment, the company’s goal is not to merge with Paris,” the report said, referring to the agreement on climate change.
Regarding the Scope 3 release, Glass Lewis said that “more detailed discussions” could be held considering BHP’s “somewhat limited targets”. Asian steel mills have produced 755 per cent of the BHP, equivalent to 4,002.5 million tonnes of carbon dioxide.
“We believe that further engagement with shareholders on these issues could be beneficial and shareholders should vote against this proposal,” it said.
Gochar noted that BHP had allocated “িয়ন 65 million” to advance the decarbonization of steel, even though it thought it had made লাভ 11.3 billion in its last fiscal year.
BHP, which is ready to distribute its petroleum resources, declined to comment.
Where climate change is combined with business, markets and politics. See FT’s coverage here.
Are you interested in the FT’s environmentally sustainable commitment? Learn more about our science-based goals here