BHP Threatens to Cut Ties With Minerals Council

Mining giant BHP Billiton has threatened to cut ties with the Minerals Council of Australia (MCA) if it continues to advocate on energy policies that fail to address climate change.

BHP released a report relating to its membership of industry associations on Tuesday, examining the associations which advocate on climate and energy policy.

The review sets out: “A list of the material differences between the positions BHP holds on climate and energy policy, and the advocacy positions on climate and energy policy taken by industry associations to which BHP belongs… and the outcomes of BHP’s current review of its membership of those industry associations.”

Of the 21 industry associations assessed as holding an active position on climate and energy policy, MCA – along with The United States Chamber of Commerce and The World Coal Association (WCA) – were found to contradict BHP policy.

Specifically, these material differences in policy relate to the equal prioritisation of the energy trilemma and a technology neutral, free-market, energy mix.

“MCA has at times argued that energy policy should prioritise reliability and affordability over ‘other policy goals’. When discussing emissions reduction in the energy sector, the MCA has highlighted the costs associated with meeting Australia’s international commitments at the expense of addressing the importance of reducing emissions,” the report said.

“We believe climate policy and energy policy are inextricably linked, and that energy reliability, energy affordability and emissions reduction should be considered on an integrated basis.

“Similarly, the MCA has suggested that the emissions intensity threshold of the Clean Energy Target recommended by the Finkel Review should be set relative to technology specific factors. We believe energy markets should be both fuel and technology neutral, and should not artificially favour one type of technology over another.”

Despite these differences of opinion, BHP indicated they would retain their membership of MCA, but warned they would consider revoking their membership if the lobby group continued to advocate in these areas.

“We derive considerable benefits, both directly and as a member of the Australian minerals industry, from the MCA’s promotion of workplace diversity and the economic contribution of the minerals industry, and advocacy for free trade. Our overall assessment is that there is high value in membership of the MCA,” the report said.

“We note, however, that the MCA has on occasion adopted an approach to advocacy and communications at variance to BHP’s preferred approach. An example was the MCA’s recommendation that, as one element in broader reform options for Australia’s charitable sector, policymakers consider imposing a cap on the advocacy activities of charities.

“BHP has determined… that it will remain a member [of MCA but] will formally communicate the identified material differences to the board of the MCA… will request that the MCA refrain from policy activity or advocacy in these areas… will maintain a register of material differences [and] will review its membership of the MCA if it has not refrained from such activity or advocacy within a reasonable period.”

BHP also expressed a preliminary view to exit the WCA, while also considering its future as part of the United States Chamber of Commerce, with a decision due 31 March next year.

BHP chief external affairs officer, Geoff Healy, said the report highlighted the company’s desire to engage with industry associations and make their position clear.

“This review makes clear the principles for our ongoing participation in industry bodies. While we won’t always agree with our industry associations, we will continue to call out material differences where they exist and we will take action where necessary, as we have done today,” Healy said.

“Importantly, we will also continue to communicate our own views directly to investors, governments and civil society and we will redouble our efforts to engage, clearly and constructively, with our industry associations to positively influence the position they take on matters important to our company.”

The not for profit Australiasian Centre for Corporate Responsibility (ACCR), proposed that BHP end its $1.86 million annual funding of MCA (17 per cent of the MCA’s subscription revenue) at its AGM.

It resulted in 10 per cent of stakeholders supporting the resolution.

“[Having] 10 per cent of shareholders disagreeing with a board is very serious. It shows how unpopular the anti-climate lobby is in general, and the Minerals Council in particular, are with investors,” executive director of ACCR, Brynn O’Brien, said.

“BHP can expect increasing scrutiny from shareholders. As long as BHP continues to be the biggest funder of the Minerals Council, it should expect to be held accountable for its role in 10 years of climate and energy policy failure in Australia.

“Shareholders have a right to know how much of their money is being used by BHP to prop up industry bodies like the MCA. Proper scrutiny of corporate payments to coal lobbyists would result in both local and global progress on climate and energy policy.”

Responding to the report, a MCA spokesperson told Pro Bono News: “BHP has been a valued member of the MCA for many years and we look forward to that relationship continuing.”