Proxy advisor PIRC backs enviro board candidate for mining firm BHP Billiton

Proxy voting advisory firm PIRC is advising its pension fund clients to back coal industry executive turned environmental advocate Ian Dunlop’s second bid to get on the board of Anglo-Australian mining giant BHP Billiton Ltd.

Dunlop, a former Shell executive and ex-chair of the Australian Coal Association, is standing for election at BHP Billiton’s annual meeting in Adelaide tomorrow (November 20).

Dunlop, who also stood in 2013, gained 1.17% support (4.57% abstention) at UK arm BHP Billiton Plc’s AGM last month. PIRC had recommended an abstention at that meeting.

“My platform is the necessity for BHP Billiton to take greater leadership in addressing the risks and opportunities which climate change presents for the company’s shareholders,” Dunlop says on his website.

Dunlop, 72, who was also chair of the Australian Greenhouse Office Experts Group on Emissions Trading and CEO of the Australian Institute of Company Directors for four years, is a Fellow of the Australasian Institute of Mining and Metallurgy, the Energy Institute (UK), a Member of the Society of Petroleum Engineers of AIME (USA) and a Member of The Club of Rome.

But the Melbourne-based company’s board is resisting his bid, saying he “does not meet the skills and experience profile required” and that he would “not add to the effectiveness” of the board.

Dunlop argues that the company’s assumption that fossil fuels will be a significant part of the energy mix for decades to come is “dangerously optimistic”.

“The board must fundamentally re-orientate the company to focus on the opportunities of the 21st Century low carbon world,” he says.“I believe that my expertise and global perspective would complement existing board members in making this unique transition, which must become top priority for BHP Billiton if its shareholders are to prosper.”

“Directors have a fiduciary responsibility to weigh the wider risks”

“Directors have a fiduciary responsibility to weigh the wider risks and opportunities that the climate and energy dilemma presents, in order to best drive shareholder returns,” Dunlop argues
PIRC says he has relevant experience in climate and carbon risk, an “increasingly significant strategic issue” for BHP Billiton and its shareholders. PIRC also notes the firm’s very public support for carbon pricing. BHP Billiton’s annual report states that it accepts the Intergovernmental Panel on Climate Change’s (IPCC’s) assessment of climate change science.

In November last year, RI reported that the Advocacy Fund from Australian Ethical bought shares in BHP Billiton specifically to support Dunlop’s first candidacy.

But major investors such as Dutch pension investment giant PGGM, APG, Norges Bank Investment Management and the California State Teachers Retirement System (CalSTRS) have voted against him. PGGM said that although climate change presents challenges for the firm, there was “no compelling case” requiring a shareholder-nominated director “against the wishes of the board”.