Investors need to call in time for flawed climate promises. So says proxy adviser Glass Lewis, who recommends shareholders agree with miner BHP’s climate change action plan, rejecting its scope as limited and pointing out that its objectives are not in line with the objectives set out in the Paris Agreement.
This is a blow to the largest miner in the world. This is a sign that investors, fresh from a spate of victories over shareholders’ proposals, will not blatantly be blown away by proposals sponsored by the council over decarbonisation, just as with compensation.
Neither should they. For many businesses, from oil and gas heads to shampoo manufacturers, achieving carbon emissions goals is a major strategic change in what they sell and how they are obtained. The so-called Say on Climate Resolutions, which seek investors’ approval of climate change plans, are on the rise. According to Insightia, there were 22 people this year. These include Glencore, Royal Dutch Shell and Rio Tinto. Since it is often on three-year cycles, it is important to get it right from the start.
Detail is the key. Take sale, a popular way to shake off carbon-free fossil fuels. BHP has its oil and gas portfolio in a independent enterprise with Woodside Petroleum, leaving BHP shareholders with 48 percent of the expanded Woodside.
Glass Lewis, who had previously recommended that shareholders vote against two other climate proposals backed by the council, used the assessments of scientific bodies to make his case.
It argues that BHPs Climate transition action plan there is no discussion of the emission intensity, which can be used by third parties to determine current and future carbon performance.
Volume 3 greenhouse gases released into the supply chain and by its customers will generally reach zero by 2050, says BHP. But there is a reservation for steelmakers, three-quarters of these emissions, because the technology does not yet exist.
BHP and its buyers of iron ore are dealing with a manufacturing process that relies heavily on coal. Switching to greener furnaces – for example using hydrogen – is a big demand, especially in China, given the relatively young existing mills.
BHP aims to improve the quality of iron ore mined and work with industry on greener processes to achieve a 30% reduction in emissions by 2030. This is the kind of wrestling room that investors will no longer allow.
The Lex team is interested in hearing more from readers. Tell us in the comments section below what you think of BHP’s climate action plans