BHP’s London investors support criticized climate change plan

BHP (NYSE: BHP; LSE: BHP; ASX: BHP) secured key backing for its climate transition strategy despite concerns that the long-term plan to tackle customers’ greenhouse gas emissions did not go far enough. 

At its annual general meeting in London, the world’s largest miner’s climate change roadmap won an 83% support — a much stronger outcome than the knife-edge result some analysts had predicted. 

“It is important that all of our shareholders have an opportunity to engage with us on our climate strategy and actions, and this advisory vote is intended to provide a forum for discussion and feedback on the plan,” Chairman Ken MacKenzie said at the meeting. 

BHP committed in 2019 US$400 million over five years to reduce greenhouse gas emissions from its operations and mined commodities. It has also vowed to reduce its Scope 3 emissions — those generated by customers using the company’s commodities — which are 40 times greater than those generated by its mines and oilfields.  

The master plan to cut such emissions by 30% by 2030 from last year’s levels, did not set hard targets for its steelmaking, which drew criticism from some investors. One of them, prominent advisory firm Glass, Lewis & Co., launched a campaign urging shareholders to vote down the plan. 

While steel is an important component in many of the products driving the decarbonization process, its production accounts for as much as 10% of global greenhouse gas emissions — and about 75% of BHP’s Scope 3 emissions. 

The company said it’s working with industry giants BHP including China Baowu Steel and Japan’s JFE Steel of ways to reduce manufacturers’ carbon footprint.

BHP has also earmarked a further US$75 million to partnerships focused on steel decarbonization with four of its major steelmaking customers but warned the road to the sector’s net zero emissions remains uncertain. 

Its Australian peer, Fortescue Metals Group (ASX: FMG), raised the stakes on iron ore producers earlier this month by setting a 2040 target to achieve net zero customer emissions. 

Goodbye London 

BHP sought to soothe concerns among its English shareholders as the company advances plans to scrap its local listing in favour of its presence in Sydney, by saying that London will remain “a vital location” for the mining group. 

“We value our partnerships and relationships in the UK and intend to maintain our London corporate office,” MacKenzie said. 

BHP dealt a blow to British investors in August when it said that it wanted to ditch its dual-listed status and retreat to a single primary listing in the home country. 

“(Share) unification will simplify BHP’s structure, make it easier for the company to make equity-based acquisitions, and make it easier for other corporate restructurings, including the Petroleum/Woodside merger,” Jefferies analysts said at the time. 

The company’s shares in London have traditionally traded at a deep discount to Australian stocks. 

UK investors including Legal & General expressed concern because the reform would mean BHP dropping out of the FTSE indices, pressuring passive investors and others benchmarking against those indices to sell their shares.