With Power Comes Responsibility for BHP

Notes From BHP Billiton’s Annual Meeting: CEO Kloppers points to business as usual but with a socially responsible bent

Mark Taylor 22 November, 2010 | 10:25AM
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Social responsibility is always something companies are keen to advertise at annual general meetings, and BHP Billiton (BLT) predictably wheeled out its triumphs: injuries down, taxes and royalties up, and a promise to seek even better standards moving forward. But the subject seemed to dominate an even larger share of the limelight than usual. Perhaps it was the sting of the Australian government's watered-down resource super profits tax--the mineral resources rent tax--the implication being that BHP isn't paying its fair share. Or was it a reaction to the regulatory knock-backs for the Pilbara iron ore joint venture and PotashCorp (POT) bid--a licking of the wounds? Is BHP too big to be a good thing for the world? Or maybe CEO Marius Kloppers simply invited a green-washing in his call for a clear carbon price signal.

Whatever it was, it made for an odd 150th anniversary meeting for a mining company. Does BHP really think anthropogenic carbon dioxide emissions contribute to a global temperature rise? Chairman Jacques Nasser made a seemingly strong statement: "For several years now, we have recognised that the science of climate change demonstrates that human activities have a negative impact on our climate and consequently pose risks to our society and economic well-being." However, it's still unclear. By accident or design, Nasser's statement makes no direct reference to carbon dioxide and is one step removed from BHP's position. Further, it's ambiguous, potentially recognition only of someone else's stance.

Does it really matter anyway? We've previously argued a tax on carbon is really just an exercise in wealth redistribution. The trick is to make sure you're on the right side of the equation. BHP's diversified business model will have some divisional winners and some losers. We highlighted Olympic Dam's uranium as a winner. And customers may end up wearing much of the carbon cost in any case, as long as there's a globally level playing field. Kloppers reported, "This year our total energy use and greenhouse gas emissions were the lowest since 2007. We have reduced the amount of greenhouse gas emitted per unit of production by 7% in the last four years." We're unsure whether this was a function of product mix or genuine gains.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
BHP Group PLC1,867.80 GBX-1.27Rating

About Author

Mark Taylor  is an equity analyst at Morningstar.

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