BHP's climate bombshell delivered in London

BHP commits to emissions reduction, declares: 'Global warming indisputable.'

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BHP executives' remuneration will be directly tied to reducing carbon emissions beginning next year.

BHP executives' remuneration will be directly tied to reducing carbon emissions beginning next year.

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Few would have expected BHP chief executive Andrew Mackenzie to say global warming was 'indisputable' on Tuesday morning in London.

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BHP's chief executive Andrew Mackenzie on Tuesday delivered a bombshell in London, declaring carbon emissions must be reduced, otherwise: "the planet will survive. Many species may not."

In a speech at an event organised by the Financial Times he saidBHP would undertake a US$400 million commitment to reduce Scope 1, 2 and 3 carbon emissions.

Scope 3 emissions are significant because they deal with actions of the company's customers and the products they have bought from it.

BHP chief executive Andrew Mackenzie dropped a staggering climate announcement on Tuesday in London.

BHP chief executive Andrew Mackenzie dropped a staggering climate announcement on Tuesday in London.

Mr Mackenzie said: "society's combustion of fossil fuels and industrial processes like steelmaking and agriculture have released greenhouse gases at rates much faster than at any other time in the geological past.

"Previous events when CO2 was added to the atmosphere more slowly and sometimes in similar amounts show us what may happen if we do not act.

"These events coincided with mass extinctions and major rises in sea level. And they also suggest that future heating will more likely be towards the upper end of forecasts.

"The evidence is abundant: global warming is indisputable," said Mr Mackenzie.

He went on to say BHP must now "take a product stewardship role for all emissions across our value chain".

Mr Mackenzie said stopping global warming would be inextricably tied from next year to BHP executives' remuneration plans, or pay scales.

"From next financial year we will clarify and strengthen this link and further reinforce the strategic importance of action to reduce emissions.

"There is an opportunity cost for any decision we make.

"We must change the current storylines about how to address global warming," said Mr Mackenzie.

The Institute for Energy Economics and Financial Analysis on Tuesday night welcomed the move, describing as "landmark" the company's decision to include scope 3 emissions - the carbon emissions generated by customers' use of BHP products such as coal, oil and gas.

The institute's energy finance studies director Tim Buckley told The Land: "Andrew Mackenzie is a scientist, but as chief executive of one of the biggest mining companies in the world, this statement made as chief executive of BHP, it's very significant, it's obvious the board has accepted this and there would have been robust discussion of this speech.

"Companies don't make statements like this without thorough debate.

"The first companies to move are relatively tentative, then others take confidence in the fact the first to take a bold step have taken the flak for them.

"Rio Tinto was a much earlier mover, but simply sold off coal assets and handed the problem to someone else, but BHP has taken leadership on this by making this statement.

"While BHP lags that of Rio Tinto's progressive thermal coal exit over 2014-2018, it's latest moves highlight the tough decision making required of big players and the declining legitimacy of thermal coal," said Mr Buckley.

"Global capital flight pressures are building, with new coal exit announcements occurring weekly in 2019. Leading Japanese trading houses have also exited thermal coal over the last year."

Mr Buckley said Wesfarmers had also exited coal last year, moving instead to rare earths and lithium, to forge a way into a future of less carbon emissions.

He said BHP will undoubtedly manage the energy transition comfortably - with thermal coal constituting just 3 per cent of its business - while "laggards like Glencore, Whitehaven and Adani, that continue to invest in a dying industry, are creating huge cost burdens for banks, insurers, governments and local communities".

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