French proxy advisor Proxinvest has joined Glass Lewis in advising investors to oppose BHP Group’s climate plan, because the science underpinning it hasn’t been independently verified.
Last week, RI reported that big US advisors Glass Lewis and ISS were divided on the credibility of the miner’s recently-published Climate Transition Action Plan, which will be put to an advisory shareholder vote at the company’s annual meeting next week (October 14).
Both raised concerns in their advice about the lack of independent assurance of BHP’s climate plan, which lays out how the company intends to reduce its emissions and manage climate risks, from a body like the Science Based Targets Initiative (SBTi). But ISS ultimately opted to give the miner’s strategy its “qualified support”, describing it as “reasonable, given the state of technological innovation”. Glass Lewis, on the other hand, recommended a vote against the plan.
Proxinvest has also recommended that investors vote against BHP’s plan, writing in its advice that “it seems difficult for shareholders to approve climate targets without guarantee that they are science-based”.
“It is essential for investors and the public that these targets are certified by outside organisations, particularly by the SBTi, which adopts in its method not only absolute reduction targets but also a Sectoral Decarbonisation Approach (SDA) on the IEA scenarios,” the Paris-based firm added, referring to Net Zero scenarios released earlier this year by the International Energy Agency.
BHP is one of a growing number of firms to offer shareholders an advisory ‘Say on Climate’ vote on their transition plans over the past 18 months. While most have so far received near unanimous approval from shareholders, the opposition to BHP’s plan from Proxinvest and Glass Lewis could be a sign that it will be harder for companies to attract support for their climate strategies in future – with investors and advisors focusing more closely on the details as such votes become normalised.
BHP plans to become Net Zero by 2050 for its direct and indirect emissions as part of the plan, but Proxinvest raised concerns about its decision not to include emissions generated by its steelmaking clients – one of the most emissions intensive industries in the world. “The climate alignment report should cover at least 90% of the indirect emissions from Scope 3,” noted Proxinvest. “While BHP discloses its Scope 3 emission, its GHG reduction targets do not cover the predominant part – steelmaking.”
BHP has been contacted for comment.