Anglo-Australian mining giant BHP Billiton, last week apparently forced the resignation of Brendan Pearson, CEO of peak mining industry body, the Minerals Council of Australia (MCA). His abrupt departure was attributed to his staunch pro-coal advocacy, which had become increasingly antithetical to BHP’s policy aims. Deputy Prime Minister Barnaby Joyce weighed in, attacking BHP for clearing house, and even Prime Minister Malcolm Turnbull pressured electricity generator AGL for sticking to its commitment to close its uneconomic and high-emitting, coal-fired power station, Liddell, in 2022. In a bizarre and legally questionable intervention, former Prime Minister Tony Abbott has argued that the federal government should use its constitutional defence power to force states to hand over responsibility for approving certain fossil fuels projects over to the federal government.
Beyond the bluster of politics, quieter moves are also underway that come with the potential for lasting impact and global flow-on effects: BHP has committed to publishing a list of material policy differences with industry associations, as well as undertaking a review of memberships and publishing the outcomes of that review.
A shareholder resolution filed by my organisation, Australasian Centre for Corporate Responsibility, to be discussed at the company’s dual AGMs in London (October) and Melbourne (November), draws attention to the issue of fundamental policy and lobbying inconsistency.
The resolution calls not only for a review of memberships, but for inbuilt accountability measures, to ensure that the issues are not just kicked down the street for another year. Resisted by BHP’s board in its recommendation to shareholders to vote against the proposal, these accountability measures are threefold. First, the resolution calls for disclosure of the fees paid to industry groups. In a calculation of shareholder value, how can such information reasonably be withheld? Second, BHP is asked to detail the impacts to the company of long-term Australian energy and climate policy uncertainty; in a value analysis, this too is key.Finally, the resolution asks that, where the review demonstrates a pattern of manifest inconsistency between an industry body’s advocacy and BHP’s position on a material policy issue, membership of that industry body is terminated. This resolution has been credited with catalysing the pressure that led BHP to make its commitment to a review and push for Mr Pearson’s resignation. This speculation is only partially accurate. While it is correct that the nature of the review announced by BHP goes some way to addressing ACCR’s shareholder resolution, it follows three years of engagement by investors on the very issue of policy inconsistency. Over those three years, the MCA became even more rogue in its climate obstructionism, with support for government subsidies for new coal-fired power generation over recent months flying in the face of Australia’s Paris Agreement commitments. BHP is the MCA’s largest financial member, paying an estimated AU$3-4 million each year in membership fees. Having fielded investor concern and vented frustrations privately for some time, BHP recently revealed an appetite to make these tensions public.
This raises a few questions: what do large organisations with relatively progressive climate policies actually get out of membership of fossil fuels lobby groups? How do any such objectives stack up against the overwhelming need to mitigate climate-related risk? And why on earth did BHP’s investors persist with the same old inside track, when it clearly wasn’t working?
The imperative to pull out all stops to protect against climate-related risk is upon us, and this message from investors to companies must be clear: come clean! You can no longer obscure the spending of shareholder funds to prop up pro-coal industry groups, and say that you are doing everything you can to protect shareholder value from climate-related risk. AGL, incidentally, left the MCA last year citing differences over policy positions on climate and renewables. We have entered an era where climate-related risk is being felt across portfolios in near-real time. Requiring disclosure of lobby groups’ funding, and, where inconsistencies are overwhelming, ceasing funding to these groups, could contribute to ending the policy paralysis at the root of our inability to respond collectively to the danger of catastrophic climate change.
Brynn O’Brien is Executive Director of the Australasian Centre for Corporate Responsibility.