BHP to stick with US group despite 'material' divergence on climate
Advertisement

BHP to stick with US group despite 'material' divergence on climate

Mining giant BHP has stopped short of cancelling its membership of the US Chamber of Commerce, despite acknowledging their "material differences" on climate change policy, but has confirmed it will walk away from the World Coal Association (WCA).

And BHP's $1.8 million-a-year membership of the Minerals Council of Australia appears unlikely to be in jeopardy, with the company saying the mining industry peak body's new energy policy, released last month, had addressed the big differences of opinion between itself and the group.

BHP chairman Ken MacKenzie (left) and chief executive Andrew Mackenzie faced a shareholder resolution at the company's AGM in November.

BHP chairman Ken MacKenzie (left) and chief executive Andrew Mackenzie faced a shareholder resolution at the company's AGM in November.Credit:Joe Castro

However, it would cease membership of the WCA due to material differences of opinion over climate change. The WCA said it was "disappointed" by BHP's decision to leave the group.

BHP had been reviewing its most contentious key peak body memberships follows the lodging of a shareholder resolution on the issue at the mining giant's AGM late last year. A similar agenda item is currently under consideration by Rio Tinto shareholders ahead of that company's AGM in May.

Advertisement

Companies' industry memberships are under increased scrutiny by investors worldwide, with AMP saying in its latest proxy voting report that it had raised the issue of "accountability and BHP’s relationship with industry associations" in its past meetings with the mining giant.

"We consider these to be important matters," AMP said, revealing that it had abstained from voting on the high-profile resolution, co-ordinated by the Australasian Centre for Corporate Responsibility (ACCR), and would have voted in favour had BHP not acted.

It also comes amid continued divisions within the Turnbull government over the role of coal-fired power in Australia's energy mix, and the debate about the future of AGL's coal-fired Liddell power station in the NSW Hunter Valley.

BHP publicly reviewed its membership of MCA last year, citing, in part, the mining lobby group's support for interventionist policies that backed high-efficiency, low emissions (HELE) coal power over other technologies.

The MCA's new policy supports technology neutrality and affirms the need for lower emissions along with reliable and affordable energy, the so-called "energy trilemma" backed by BHP. "From a policy perspective, the updated MCA position addresses the two areas identified as material differences by BHP," the company said.

BHP has backed the Minerals Council's new energy policy.

BHP has backed the Minerals Council's new energy policy. Credit:Vincent Mundy

The USCC has described the Paris agreement climate goals as unachievable and has opposed carbon pricing, in opposition to BHP's own positions. BHP said it had asked the USCC to refrain from lobbying on issues where there was a "material difference" in policies between itself and the peak body, and said it would seek to influence policy change through the USCC's energy and environment committee, which BHP has been invited to join. It would keep its membership of the group under review, BHP added.

Loading

The ACCR, which also co-ordinated the resolution at Rio's AGM, said BHP's decision on the USCC "flies in the face of the company’s interests, and those of its shareholders". The USCC had a "track record of conducting active sabotage to any meaningful climate policy for the United States", it said.

"Make no mistake; the board today have made a conscious decision to continue to fund activities which not only expose our company to grave reputational risk, but also undermine its economic interest," ACCR executive director Brynn O'Brien said.

But BHP said it derived a range of benefits from its membership of the USCC, "particularly its advocacy on economic issues such as free trade and tax reform", with the group having recently warned US President Donald Trump against imposing tariffs on steel and aluminium.

"It would be difficult for BHP to replicate this advocacy outside of the membership of the chamber," BHP said.

Ruth Williams investigates corporate governance, crime, financial regulation and whistleblowers.

Search ASX quotes

Most Viewed in Business

Loading
Advertisement