BHP says “social value” to be key aspect of its business planning

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BHP (ASX, NYSE:BHP), the world’s
largest miner, is stepping up efforts to reassuring investors that the company
is committed not only to protecting the environment, but to ensure its
operations deliver “social value”.

The company, which recently committed to invest $400 million over five years to reduce greenhouse gas emissions from its operations and commodities, believes that a key component of being able to deliver financial value is to “hardwire” local interests into its decision-making processes.

“In order to deliver financial value, you have to deliver social value. The two are completely intertwined,” BHP’s chief external affairs officer, Geoff Healy, said on Tuesday. “This is just good, sensible business.”

World’s largest miner is moving from keeping a social licence to creating value for its stakeholders.

Healy noted the company is moving
from a position of keeping a social licence to creating value to the communities
involved and affected by its operations.

The idea is to add a social value
assessment to the five-year business plans at all of BHP’s operations. That
will be linked to the company-wide scorecard that determines employee bonuses
and so help embed the aspect in the miner’s business model.

The move follows a series of recent
steps BHP has been taking to become an environmentally friendly company,
including carbon capture and storage and other innovations such
as direct air capture.

The Melbourne, Australia-based
giant has also been moving away from thermal coal, which currently makes up
about 5% of its revenue, at a very fast pace.

Healy’s speech comes after a survey of global mining companies by Ernst & Young identified “maintaining a social licence”, or how much a company’s business practices are accepted by employees, interest groups and the overall public, among the top risks facing miners.

It also follows Rio Tinto’s pact with China’s biggest steelmaker Baowu to develop and implement ways to reduce carbon emissions in the steel sector, which is responsible for about 9% of global carbon dioxide (CO2) emissions.

Demonstrating a commitment to
social value, Healy noted, could help BHP keep a competitive advantage by accessing
the “best talent, the best resources and the best markets.”

“While our foundations are
strong, we know that change is accelerating, and – so must we – to stay competitive,”
he said.

By effectively tackling climate
change and delivering social value, BHP believes the industry will be more
likely to attract the young digital-savvy workers it needs.