BHP to tie CEO bonus to success in cutting customer emissions

[MELBOURNE] BHP Group will link a portion of bonus payments for chief executive officer Mike Henry and key leaders to progress by the world's top miner on lowering greenhouse gas emissions at both its own operations and those of its customers.

Mr Henry, promoted in January, and others will have 10 per cent of short-term incentive payments tied to measures to curb emissions across its supply chain, including through the use of its iron ore and coking coal in a steel-making sector that accounts for about 7 per cent of all global emissions.

BHP will seek to help the steel industry reduce emissions intensity by 30 per cent by 2030 and aims to support a similar cut of 40 per cent in the maritime sector, the Melbourne-based company said on Thursday in a statement.

It's the company's approach to scope three emissions - those mainly created when customers such as China's steel mills use BHP's raw materials - that'll be most in focus for investors and climate scientists. Supply chain emissions, much like for oil majors, typically can account for more than 90 per cent of BHP's total.

Some analysts argue that setting intensity targets is less valuable than more precise goals to make specific, absolute reductions to volumes of emissions.

BHP will also take action to lower its own operational emissions by 30 per cent by 2030 from current levels - seen by the company as a way-maker on a longer-term path to have net-zero emissions at its sites by the middle of the century.

"We must focus on what we can control inside our business, and work with others to help them reduce emissions from the things that they control," Mr Henry said. The producer, which last month confirmed plans to sell some coal mines, will also focus on "shaping our portfolio over time to benefit from the mega-trends playing out in the world including decarbonisation and electrification," he said.

BLOOMBERG