Given the opportunity to make a meaningful statement about the climate, the BHP board have jumped into bed with the wrong people.
BHP is often praised for its climate commitments. But presented with an opportunity to lead, and with the imprimatur of a solid chunk of their investor base in favour of decisive action, BHP’s Board have balked. Last week’s decision to remain a member of the US Chamber of Commerce (USCC) and the Minerals Council of Australia (MCA) is as conscious as it is contradictory; BHP will continue to fund activities which not only expose it to grave reputational risk, but also undermine its economic interests.
The announcement also confirmed the withdrawal of BHP from the world’s peak coal lobby, the World Coal Association. This is commendable. However, it is nowhere near enough to wash off the stink of BHP’s support for lobbyists that undermine the Paris Agreement and jeopardise efforts to protect companies from climate risk.
BHP is well aware that the USCC’s activities have included lobbying the Trump Administration to withdraw from the Paris Climate Agreement. It may prove to be the single most destructive act by any government in relation to our global ability to confront climate change. Yet, BHP will continue to bankroll the USCC. It will not disclose how much it pays for membership.
Any company that is exposed to climate change and that is contributing to it in the way that BHP is, should be addressing it as their top priority. Instead, BHP, has decided to ignore its obligations.
To the MCA, BHP has more or less awarded a free pass. The board has decided that cosmetic changes made last month to the MCA’s climate policy have (surprise!) now brought their positions into alignment with BHP’s own. This is despite a decade of enthusiastic and self-congratulatory climate obstructionism undertaken by the MCA. The MCA will continue to enjoy the support of BHP’s brand, not to mention its millions of dollars in annual membership fees.
BHP’s logic is easy enough to follow; it will retain its membership of the USCC due to its “commentary on the issue of steel and aluminium tariffs in the United States.” This commentary would be hard for BHP to undertake alone, according to BHP. The board gives a vague list of benefits it says it gets from MCA membership: “health and safety, environment, community, workforce and economics.” Even BHP sounds unconvinced.
But let us be clear, climate change is not a run of the mill “tax and tariffs” type issue. It is not even a “health and safety” type issue. It is massive, it is systemic, it is global. Accordingly, everyone needs to play their part in addressing it. At a minimum, companies need to stop rewarding coal lobbyists with more funding, regardless of what other “benefits” they claim to get from membership. Any company that is exposed to climate change and that is contributing to it in the way that BHP is, should be addressing it as their top priority. Instead, BHP, has decided to side with climate wreckers and ignore its obligations to the rest of us.
This has damaging implications for Australia’s increasingly farcical energy policy:
“Dear Monash Forum, you and your mates in the coal lobby/love-in can continue on your path of global climate policy destruction and you will face no consequences. In fact, we’ll continue to back your mates with our shareholders’ millions. Yours, BHP.”
BHP’s announcement followed an internal review, prompted by a shareholder resolution filed by my organisation, the Australasian Centre for Corporate Responsibility (ACCR). Except that our resolution didn’t merely ask for a review. We asked that the board commission a comprehensive evaluation of BHP’s relationships with industry associations, those associations’ anti-climate lobbying activities, and the impact of those activities on BHP’s material interests over a five-year period. We asked for BHP to exit memberships where that evaluation showed material negative impact. But our proposal for accountability for real world policy outcomes was resisted in favour of a soft-touch approach to minimise potential fallings out with their mates in the coal industry. The majority of BHP’s investors gave this approach the benefit of the doubt; in investor Australia, out of a combination of culture, complacency and low expectations, it is sacrilege to vote against board recommendations.
And so here we are. BHP is still a member of the US Chamber of Commerce, and Trump is out of Paris. BHP is still a member of the Minerals Council and it looks as though another Australian Prime Minister might be about to be sacrificed to the coal gods. A move to exit the USCC would not be unprecedented. The risk of association with the USCC has proven too great for many of the world’s top companies who have quit the USCC in recent years – some explicitly doing so because of its climate policy positions – including Apple, Costco, CVS, eBay, Hewlett-Packard, General Mills, Kellogg, Kraft Heinz, Mars, Mattel, Mondelēz, Nestlé, Pacific Gas & Electric, Starbucks, Unilever and Walgreens Boots Alliance. Likewise, the MCA’s membership has dwindled in recent years with high profile exits of AGL, Iluka Resources, Wesfarmers and Paladin Energy.
BHP’s slow dance with a dying industry continues. To this point, investors have only minimally intervened. The danger to which BHP continues to expose itself will increase over time. As this week has shown, the coal lobby will take policies, prime ministers, markets and the planet down with it. The drumbeat of investor concern about corporate climate lobbying must grow louder from here.