Why BHP’s green ambitions turned to empty promises
There is a screaming cognitive dissonance created by BHP’s slowness to invest in renewables and carbon reduction when its CEO declared climate change an existential crisis just seven years ago.
Was the miner’s then-CEO Andrew Mackenzie merely virtue-signaling in 2019 when he announced to a London room full of politicians and industry leaders that his company would lead the capitalist group in greening the world?
Probably not. But Mackenzie’s ambition appears to have been replaced by the apparent mentality of today’s BHP leaders, where capitalism has trumped climate and environmental protection has taken a backseat to profit.
One of Australia’s largest and most recognizable companies, BHP’s senior management in the modern era was keenly aware of the mining giant’s image and social license to mine the country’s natural resources.
But it appears he is even more conscious of the need to maximize return on capital. And as in any large company, there is competition between departments or projects over where to spend investment. This is the backbone of the capitalist company model.
Was the miner’s then-CEO Andrew Mackenzie merely virtue signaling when he announced in 2019 that his company would lead capitalists in greening the world?
Clearly The Big Australian remains very protective of its ESG (environmental, social, governance) bona fides.
Well public tour by ABC and Guard It is deeply shameful that BHP has abandoned its bolder targets to reduce carbon emissions from its iron ore operations in Western Australia; This represents a reversal of promises made to Australia and its shareholders, who have strongly supported more aggressive emissions reduction targets.
And it’s certainly no coincidence that days before the media covered this BHP climate revelation, the company ran major newspaper ads promoting its breakthroughs in reducing carbon emissions.
Media outlets have accessed a range of internal communications to prove how BHP’s initial ambitious plans to generate renewable energy were abandoned, suspended or slowed down.
Interestingly, among the various BHP documents unearthed in this trove were warnings about the risks of letting the pedal go as we move towards net zero targets.
The obvious risk around the optics of putting climate change on the back seat was reputational.
The potentially bigger risk is that doing less could lead to financial pain, such as more expensive carbon credits, if companies like BHP can’t meet climate needs quickly enough.
This is where the government plays a very important role; Applying both carrot and stick policies to influence company behavior.
There are two government plans of great importance for carbon reduction. The first is the Safeguard Mechanism, which requires companies that create a baseline level of carbon emissions and exceed that ceiling to effectively purchase credits to offset the excess.
Leaked internal documents from May 2025 show BHP’s Western Australian mining division paid $8 million in such offsets in the previous financial year. Managing risk is an important task for any company, and so is capital allocation.
While financial problems persist, the Safeguarding Mechanism does not even rise to the level of a branch. In terms of policy, this is an epic failure.
The reason BHP supports the government plan is that it would work in favor of miners, similar to the diluted mining supertax that BHP approved 15 years ago.
More importantly, the government’s diesel rebate prevents the company from switching its energy sources from fossil fuels to renewable energy sources.
BHP is the mining industry’s largest diesel user. It received approximately $622 million in fuel tax credits from the federal government last fiscal year, according to media reports; this includes $379 million for WA iron ore mines.
You can understand why management has put replacing miners’ diesel trucks with electric vehicles at the back of the queue to make investment money.
While BHP has praised its progress towards net zero in its advertising, it’s worth noting that the heavy lifting in reducing carbon emissions is being done at its operations in Chile, whose government aims to use 90 per cent renewable electricity in mining by 2030.
While the company has found cover behind its claims on global climate, it doesn’t help Australia and our government’s record on tackling emissions.
The Market Summary newsletter is a summary of the day’s transactions. Let’s each take ittoday afternoon.
