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BHP’s approach to climate change
risk management
Dr. Fiona Wild
Vice President, Sustainability and Climate Change

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BHP global locations

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About BHP
• We are a leading global resources
company.
• Our purpose is to create long-term
shareholder value through the discovery,acquisition, development and marketing of
natural resources.
• Our strategy is to own and operate large,
long-life, low-cost, expandable, upstream
assets diversified by commodity,
geography and market.

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Our portfolio

Minerals
Australia

Large, long-life, low-cost, expandable, upstream assets diversified by commodity, geographyand market

Queensland Coal

Escondida

Pampa Norte

NSW Energy Coal

Olympic Dam

Petroleum

Minerals
AmericasWestern
Australia IO

Onshore US

ShenziJansenAngostura

Antamina

Pyrenees

Cerrejón

MacedonNote: Represents BHP Billiton’s core portfolio.

4Atlantis

SamarcoMad Dog

Bass Strait

North West
Shelf

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Our Charter
Our Values•

Sustainability – Putting health and safety
first, being environmentally responsible andsupporting our communities.

•Integrity – Doing what is right and doing
what we say we will do.

•Respect – Embracing openness, trust,teamwork, diversity and relationships that are
mutually beneficial.

•Performance – Achieving superior businessresults by stretching our capabilities.

•Simplicity – Focusing our efforts on thethings that matter most.

•Accountability – Defining and accepting
responsibility and delivering on ourcommitments.

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Total economic contribution

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1. Community contribution includes cash and administrative costs (US$123.7 million) and funds transferred to BHP Billiton Foundation (US$55 million). Includes payments made by equity accounted investments.
2. The total economic contribution made during FY2016 of US$26.7 billion is determined by combining total payments to governments of US$3.7 billion (determined on a cash basis), payments to suppliers of US$14.0 billion, employee expensesof US$3.6 billion, distributions to shareholders and investors of US$5.2 billion (determined on an accrual basis) and community contribution of US$178.7 million.
3. Shareholders and investors includes US$4.2 billion of dividends attributable to members of the BHP Billiton Group and US$1.0 billion of interest expense.

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Our approach to climate change
At BHP Billiton:•

Climate change is a critical, Boardlevel, governance and strategicissue.

•We accept the IPCC’s assessmentof climate change science.

•We believe the world must pursue
the twin objectives to limit climatechange and provide access toreliable and affordable energy.

•We don’t prioritise one of theseobjectives over the other – both areessential to sustainabledevelopment.

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Our actions• We are committed to taking action on
climate change by:•

Reducing our emissions.

•

Adapting to the physical impacts ofclimate change.

•Working in partnership to accelerate thedevelopment and deployment of low
emissions and renewable technologies.

•Working with others to enhance theglobal response.

•

Testing and building the resilience of ourportfolio.

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Mitigation
Reducing our operational GHGemissions••••Greenhouse gas emissions1(million tonnes of CO2-e)Our target is to keep total operationalemissions below FY2006 baseline inFY2017.

FY2012FY2013In FY2016, total emissions were 18
MtCO2-e, 13 per cent lower than thebaseline.

FY2014

Performance was driven by emissions
reduction projects and improved
productivity.

FY2016FY201511.3 6.7
0Projects implemented since FY2013
have delivered more than 950 KtCO2-eof annual abatement at our operations.

204060Adjustment to allow annual comparison2

Scope 14

Scope 23

FY2006baseline5)

1. Measured according to the World Resources Institute/World Business Council for Sustainable Development Greenhouse Gas Protocol.
2. In order to compare the total GHG emissions in FY2015 to prior financial years, GHG emissions (estimated) from South32 assets between the date of demerger and 30 June 2015
have been added to FY2015 GHG emissions as shown above.
3. Scope 2 refers to indirect GHG emissions from the generation of purchased electricity and steam that is consumed by operated assets (calculated using the market-based method).
4. Scope 1 refers to direct GHG emissions from operated assets.
5. Our FY2006 baseline is adjusted as necessary for material acquisitions and divestments based on asset GHG emissions at the time of the applicable transaction.

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Mitigation
Reducing emissions from deforestationand forest degradation•Developed guide to REDD+12
governance with Baker and McKenzie.

•Made US$5 million commitment to Alto
Mayo in Peru, managed by Conservation
International and protecting around
182,000 hectares of globally-significant,threatened forests.

•Supported the world’s first Forests Bond,which could stimulate the global market
by enabling investors to receive interestin cash or REDD+ credits.

1. Reducing Emissions from Deforestation and Forest Degradation, as well as conservation, sustainable
management of forests and enhancement of forest carbon stocks.
2. Image supplied by Conservation International.

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Adaptation
Focusing on the future•

Our assets are long-lived, therefore
we must take a robust, risk-based
approach to adapting to the physicalimpacts of climate change.

•We require all our operations toassess the potential physical impactsof climate change.

•We are already taking action to build
the resilience of our operations.

•We also consider ways to build
community and ecosystem resilience
to climate impacts.

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Low emissions technology
12REDD+¥¥¥¥¥¥• US$5 million commitment toAlto Mayo in Peru, managed
by Conservation Internatioand protecting

BHP Billiton SaskPower CCS
Knowledge Centre

Peking University andpartners – steel sector CCS• In 2014, SaskPower’s Boundary
Dam became the first postcombustion, coal-fired power
station with CCS.

• BHP Billiton, Peking University
and the National Centre for
Climate Change Strategy andInternational Cooperationagreed in June 2016 toestablish a collaborativecentre.

• BHP Billiton founded theInternational CCS Knowledge
Centre in February 2016 to shareknowledge and learnings from theproject.
• It now has significant international
profile and engagement withproject developers.

• The centre is focused on
addressing policy, economic
and technical barriers to theapplication of CCS to the steel
sector.

12Lakeland Solar and Storage• Batteries offer potential todeliver baseload renewablepower.
• We are partnering to develop
a 13 megawatt solar
photovoltaic power plant.
• Incorporates 5.3 megawatt
hours of lithium-ion battery
storage at a ‘fringe of grid’
location in Australia.

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Portfolio evaluation• We have been testing the resilienceof our portfolio for many years•

We develop forecasts based ondetailed analysis.

•We have a robust scenario planning
process to test the resilience of ourportfolio against a range of scenariosand shock events.

•We use signposts to help us
understand which scenario isbecoming more dominant.

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Global Accord• Global Accord describes:•Robust global economic growth.

•Unified action to address climatechange – high cooperation andcommitment to limit emissions.

•Breakthroughs in low emission andrenewable technologies.

•There is an orderly transition to a 2oCworld.

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Demand for BHP Billiton commodities
remains strong
Long-term commodity demand range in a 2°C world

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Our portfolio is resilient• Portfolio Resilience•

Our analysis shows that BHP Billiton
will continue to create substantial
value for shareholders under both anorderly and a more rapid transition toa 2oC world: Diversified portfolio; Low cost assets;
 High quality products;
 Growth options of ~20% IRR1;
 Scenario planning and future
optimisation.

•We will continue to adapt and evolveto strengthen the portfolio and deliver
long term shareholder value.

1. Based on the project pipeline in both the Global Accord scenario and shock event. Refer to BHP’s 2015 report ‘Climate Change - Portfolio Analysis’16

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Portfolio Analysis
In September 2015, we released ourClimate Change: Portfolio Analysis. Thisreport:•Provides insight into our approach toscenario analysis.

•Explores the potential implications for ourcompany of both an orderly and a more
rapid transition to a 2 degree world.

•Shows that in these scenarios ourdiverse portfolio is resilient because of its
high quality resources, low costs ofproduction and rapid payback periods.

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Views After Paris
Views after Paris provides:•A tangible demonstration of how wemonitor the external environment.

•An explanation of how we identify andtrack signals which provide timely
insights into potential impacts on ourportfolio.

•An insight into how these inform ourstrategic decision-making at the highest
levels of our company.

•An update on our actions, as part of ourintegrated approach to climate riskmanagement, over the past 12 - 18months.

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Stakeholder engagement• Stakeholder engagement•

Published CEO COP21 Statement.

•Signed UNFCCC’s Paris Pledge.

•Joined Energy Transitions
Commission.

•Recognised in CDP’s Climate
Disclosure Leadership Index.

•Participated in the Financial Stability
Board’s Task Force on Climate-related
Financial Disclosures

19IEEJ：June 2017 © IEEJ2017TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)
The Financial Stability Board (FSB)
established the Task Force on Climaterelated Financial Disclosures (TCFD) onDecember 4, 2015 to develop
recommendations for more efficient andeffective climate-related disclosures that:Industry Led and Geographically Diverse Task
Force
The Task Force’s 32 international members, led by Michael
Bloomberg, include providers of capital, insurers, large nonfinancial companies, accounting and consulting firms, andcredit rating agencies.

‒ could “promote more informed
investment, credit, and insurance
underwriting decisions” and,‒ in turn, “would enable stakeholders
to understand better theconcentrations of carbon-related
assets in the financial sector and thefinancial system’s exposures toclimate-related risks.”

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CLIMATE-RELATED RISKS AND OPPORTUNITIESTypeClimate-Related Risks

Type

‒

Increased pricing of GHG emissions‒Enhanced emissions-reporting obligations‒Mandates on and regulation of existing products and services‒Exposure to litigation

Resource
Efficiency

Policy and LegalUnsuccessful investment in new technologies‒

Upfront costs to transition to lower emissions technology

Markets‒

Changing customer behavior‒

Uncertainty in market signals‒ Increased cost of raw materials
Reputation‒

Shift in consumer preferences‒

Stigmatization of sector‒ Increased stakeholder concern or negative stakeholder feedback
Acute

Physical Risks‒

Increased severity of extreme weather events such as cyclones and floods

Energy Source‒

Products andServices

Substitution of existing products and services with lower emissions options

Markets‒

Chronic‒

Changes in precipitation patterns and extreme weather variability‒

Rising mean temperatures‒

Rising sea levels

Resilience

Transition Risks

Technology

Climate-Related Opportunities‒

Use of more efficient modes of transport‒

More efficient production and distribution processes‒

Use of recycling‒

More efficient buildings‒

Reduced water usage and consumption‒

Lower-emission sources of energy‒

Supportive policy incentives‒

Emergence of new technologies‒

Participating in carbon market‒

Energy security and shift towards decentralization‒

Develop and/or expand low emission goods and services‒

Climate adaptation and insurance risk solutions‒

R&D and innovation‒

Diversify business activities‒

Shifting consumer preferences‒

New markets‒

Public-sector incentives‒

New assets and locations needing insurance coverage‒

Participate in renewable energy programs and adopt energyefficiency measures‒

Resource substitutes/diversification

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IEEJ：June 2017 © IEEJ2017DISCLOSURE RECOMMENDATIONS
The four recommendations are supported by specific disclosures organizations can
include in financial filings to provide decision-useful information about their climaterelated risks and opportunities.
Governance

StrategyRisk ManagementMetrics and Targets

Disclose the organization’s governancearound climate-related risks andopportunities.

Disclose the actual and potential impactsof climate-related risks andopportunities on the organization’s
businesses, strategy, and financial
planning.

Disclose how the organization identifies,
assesses, and manages climate-relatedrisks.

Disclose the metrics and targets used toassess and manage relevant climaterelated risks and opportunities.

Recommended Disclosures

Recommended Disclosures

Recommended Disclosures

Recommended Disclosuresa) Describe the board’s oversight ofclimate-related risks andopportunities.

a) Describe the climate-related risks
and opportunities the organization
has identified over the short,medium, and long term.

a) Describe the organization’s processes
for identifying and assessing climaterelated risks.

a) Disclose the metrics used by theorganization to assess climaterelated risks and opportunities in linewith its strategy and risk
management process.

b) Describe management’s role inassessing and managing climaterelated risks and opportunities.

b) Describe the impact of climaterelated risks and opportunities on
the organization’s businesses,strategy, and financial planning.

b) Describe the organization’s processes
for managing climate-related risks.

b) Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse gas(GHG) emissions, and the relatedrisks.

c) Describe the potential impact ofdifferent scenarios, including a 2° c
scenario, on the organization’sbusinesses, strategy, and financialplanning.

c) Describe how processes for
identifying, assessing, and managing
climate-related risks are integrated
into the organization’s overall risk
management.

c) Describe the targets used by theorganization to manage climaterelated risks and opportunities andperformance against targets.

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SCENARIO ANALYSIS
Scenario analysis is an important and useful tool for understanding the strategic
implications of climate-related risks and opportunities.
The Task Force recommends that organizations describe the potential impact of different
scenarios, including a 2°C scenario, on their businesses, strategy, and financial planning.
Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, andfinancial planning.
Recommended Disclosure

Guidance for All Sectorsc) Describe the potential
impact of different
scenarios, including a 2°C
scenario, on theorganization’s businesses,
strategy and financialplanning.

Organizations should describe how their strategies are likely to perform under various forwardlooking, climate-related scenarios (e.g., potential effects under different scenarios) and any
resulting changes to their strategies and financial plans, risk management activities, ortargets/metrics to mitigate risks and take advantage of opportunities.

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NEXT STEPSThe Task Force is in the process of evaluating feedback and potential changes to thereport, which is scheduled to be finalized and released in June 2017.
The FSB has extended the Task Force through mid-2018 to support and monitor
adoption.
Timeline
Second Quarter2017
Apr 20-21: Meeting of G20
Finance Ministers andGovernors

Third Quarter
2017

Fourth Quarter
2017

First Quarter2018

Jul 7-8: FSB reportpresentation at G20
SummitQ2: Update report per
consultation feedback

Second Quarter2018

Q2 2018: Submission ofimplementation monitoring report

Q4 2017-Q2 2018: Implementation monitoringQ2 2017-Q2 2018: Outreach and engagement

Jun: Issuance of final report
to FSB24

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Conclusion
Addressing climate change is a priority for BHP Billiton•

We have a clear and consistent position.

•Our integrated strategy address a range of climate-related risks and opportunities.

•Transparency is critical – more disclosure will help everyone make informedchoices.

•We remain committed to taking action and supporting an effective globalresponse.

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IEEJ：June 2017 © IEEJ2017TASK FORCE MEMBERS
Chair and Vice-Chairs
Michael Bloomberg
ChairmanFounder and President
Bloomberg L.P.
Denise Pavarina
Yeo Lian Sim
Vice-Chair
Vice-ChairManaging Officer
Special Adviser
Banco Bradesco
Singapore Exchange
Graeme Pitkethly
Vice-Chair
Chief Financial Officer
Unilever

Christian Thimann
Vice-ChairGroup Head of Strategy,
Sustainability and Public
Affairs
AXA

Members
Matt Arnold
Wim Bartels
Managing Director andGlobal Head,
Sustainability Reporting Global Head of Sustainable
Financeand Disclosures
JPMorgan Chase & Co.
KPMG
Jane Ambachtsheer Bruno Bertocci
Managing Director, Head ofPartner, Chair –Responsible Investment Sustainable Investors
UBS Asset Management
MercerRichard Cantor
David Blood
Chief Risk Officer
Senior Partner
Generation Investment Moody’s
Management

Koushik ChatterjeeGroup Executive Director,
Finance and Corporate
Tata Group

Eric Dugelay
Global Leader,
Sustainability Services
Deloitte

Udo Hartmann
Stephanie Leaist
Managing Director, Head of Senior Manager, Group
Environmental
Sustainable Investing
Protection & Energy
Canada Pension Plan
Management
Investment Board
Daimler
Liliana Franco
Neil Hawkins
Director, Accounting
Corporate Vice President
Organization andand Chief Sustainability
Methods
Officer
Air Liquide GroupThe Dow ChemicalCompany
Diane Larsen
Audit Partner, Global
Professional Practice
EYThomas Kusterer
Chief Financial Officer
EnBW

Eloy LindeijerMark Lewis
Managing Director, Head of Chief, Investment
Management
European Utilities Equity
PGGM
ResearchBarclays
Masaaki Nagamura
Ruixia Liu
Head, Corporate Social
General Manager, Risk
Responsibility
Department
Industrial and Commercial Tokio Marine Holdings
Bank of China

Giuseppe Ricci
Health, Safety, Environment
and Quality Executive Vice
President
ENI

Martin Skancke
Chair, Risk Committee
StorebrandAndreas Spiegel
Head Group Sustainability
Risk
Swiss Re

Steve Waygood
Chief ResponsibleInvestment Officer
Aviva Investors

Deborah Winshel
Managing Director, Global
Head of Impact Investing
BlackRockFiona Wild
Vice President,
Sustainability and ClimateChange
BHP Billiton

Michael Wilkins
Managing Director,
Environmental Finance
S&P Global Ratings

Jon Williams
Partner, Sustainability
and Climate Change
PwC

Special Adviser
Russell Picot
Chair, Audit and Risk Committee, LifeSight
Former Group Chief Accounting Officer
HSBC

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