Published on 19 November 2019


BHP shareholders intensify pressure to leave fossil fuel lobbyist groups

For shareholders in support of the ecological transition, BHP – one of the world’s largest mining companies – must end ties with fossil fuel lobbyist groups. Almost one-third of shareholders voted for such a resolution, but according to the CEO of BHP, leaving these associations will not lead the industrial sector towards a low-carbon society.

Mine fer BHP Western Australian BHP
The Anglo-Australian BHP Billiton is the second largest mining company in the world.

These contrasting philosophies pitted shareholders of the Anglo-Australian mining company BHP against its former CEO Andew McKenzie. At the group's general meeting in London on Friday October 18th, 22% of shareholders, including the Church of England and Aberdeen Standard Investments, supported a resolution that management called on them to reject. On November 8th, pressure intensified as 29.58% of the shareholders voted in favor of the resolution during their meeting in Sydney.

This vote means the company should end ties with all lobby groups that do not align with the Paris Agreement, especially those supporting fossil fuels. BHP is not obligated to do so, but this considerable level of support does keep pressure on management. "The advisory vote sends an unequivocal signal to BHP's board of directors," said Adam Matthews, Director of Ethics & Engagement at the Church of England Pensions Board. "Negative lobbying continues despite promises made by BHP in 2017 that trade organizations should stop lobbying when its members are not aligned" with the Paris Agreement, he added.

Isolation is not an option

Indeed, two years ago, such a resolution had already been voted on and at the time had been supported by only 8% of shareholders in the United Kingdom. This was enough to force BHP to announce its withdrawal from the World Coal Association, the largest lobbyist organization on the planet. But now, two other groups have become the target for shareholders: Minerals Council of Australia, the country's first lobby group on coal, and Coal21, which promotes carbon capture technologies associated with coal.

For McKenzie, leaving all these groups is not a good strategy. “Climate change is a complex problem,” he said. “If we're going to successfully develop solutions, we need to collaborate within our industry more broadly. We cannot do it alone and we should not be forced to isolate ourselves. Industry associations are a vital forum for this collaboration”.

A world in demand of metal

McKenzie added that mining companies are "the locomotives that will lead us to our low-carbon future", arguing that a carbon-free world requires much more metal than a fossil fuelled world. This has become common rhetoric for the company and has often been denounced as greenwashing by critics. In 2017, the World Bank did confirm that renewables and electric cars could consume "significantly more resources than traditional systems based on fossil fuels".

BHP refuses to leave all coal lobbyist groups for now, however, the company has decided to slow the production of thermal coal (for electricity generation), to focus instead on coking coal (used for steel production). In a presentation to investors last June, CFO Peter Beaven explained that the group no longer wanted to expand in this sector and said that thermal coal would be "phased out, potentially earlier than expected".

Ludovic Dupin, @LudovicDupin

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