The BHP Group Ltd (ASX: BHP) share price is down over 1% after releasing its full annual report to investors today.
We've already seen BHP's financial results from the preliminary final report a few weeks ago during reporting season. Revenue was up 3% to US$44.3 billion, total net profit was up 124% to US$8.3 billion and continuing profit was up 1% to US$16.1 billion.
But today in the final report, the company made more references to its position in the world and the role it plays.
BHP CEO Andrew Mackenzie said that whilst BHP's performance is a key indicator of success, how it operates is "equally critical".
BHP changed its company purpose to "bring people and resources together to build a better world". He also said that the company has added social value as one of the five company priorities.
He went on to write "These changes recognise that we work with a range of stakeholders to make a positive contribution to the world. We know we must build trust and forge mutually beneficial partnerships for the long term, because the value we create together is central to shareholder value."
These sentiments are very interesting coming from a business that produces oil and coal, it's something that other Australian resource businesses do not really have a focus on.
But I think it makes a lot of sense. Junk food businesses don't want their products to be banned or taxed, and they shouldn't want their consumers to get diabetes. So it could be beneficial over the long term for work to be done in this area.
If climate change was not an issue for BHP, then it could try to make as much profit as possible – but long-term shareholder value could be damaged from climate change and perhaps there would be a large shift away from fossil fuels – at the moment it's just a slow change.
Mr Mackenzie spoke to the AFR in June saying, "You choose the ones that really have a big impact on you, or where you could have a negative impact if you don't address them properly".
What is BHP doing?
That's why the company, as one of the world's biggest resource businesses, reports on the emissions profiles of its customers which is called 'Scope 3' emissions.
BHP is working with its customers and other stakeholders to reduce emissions in the life cycle of its products.
BHP Scope 3 emissions linked to fossil fuel products, being coal, oil and gas, were 232.7 million tonnes of carbon dioxide equivalent gases in FY19. The rest of BHP's productions were responsible for 304.7 million tonnes of carbon dioxide equivalent in the processing stage.
Thankfully, BHP's FY19 Scope 3 emissions were lower than FY18 and FY17.
Whilst the reporting of emissions is not easy to do and may not be very accurate with its customers are also reporting their own emissions numbers, it's perhaps a step in the right direction to ensuring the long-term sustainability of all of BHP's resource divisions.
With BHP handsomely rewarding shareholders in FY19 with dividends and buybacks, whilst also paying attention to climate change, it may be able to find the balance to please everyone.
