BHP (ASX:BHP) share price climbs as miner hones in on ESG future

Could BHP’s climate-focused future be bolstering the miner’s shares on Friday?

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Three happy miners standing with arms crossed at quarry

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The BHP Group Ltd (ASX: BHP) share price is on the move on Friday. This follows the company conducting its annual general meeting (AGM) yesterday. In this meeting, the miner discussed a multitude of important topics, not the least of which was its commodity portfolio transformation.

Heading into afternoon trade, shares in the diversified mining company are exchanging hands for $38.73 apiece, up 2.46%. Despite this, the BHP share price is still 29.6% off its 52-week high of $54.55.

Nevertheless, the company’s management shared its ambitions for the future in its AGM. Let’s unpack what was covered during this event.

What’s happening with the BHP share price today?

The pressure for companies, governments, and organisations to abide by some form of climate target is a growing trend. As we speak, the Australian government is squabbling over the details of a climate agreement before heading into the Glasgow Climate Conference (COP26).

While some might see it as a hindrance, others are viewing the emerging policies as an opportunity. Australia’s third-largest listed company is one such player that is positioning for the potential megatrends to come out of this shift.

In its AGM yesterday, BHP explained it had conducted its own modelling in 2020 of a world aligned to the Paris Agreement. The result indicated such an environment would be beneficial to shareholders, with the company playing a role in the energy transition. From this, BHP reiterated its composition of assets will play a vital role in this trend.

In addition, the company highlighted its ongoing effort to assess its portfolio to ensure it delivers value to shareholders. Currently, import assets fitting the growing environmental, sustainability, and governance (ESG) narrative include copper, nickel, steel, and potash. As such, ESG investors might be taking the BHP share price more seriously today.

Climate efforts

Potash has been a major focus for BHP, with its Jansen mine expected to produce 4.5 megatonnes per year of the potassium-rich resource.

Furthermore, in its AGM, BHP outlined it has made strong progress towards meeting its climate initiatives. These include the following items:

  • Establishing a pipeline of decarbonisation projects to achieve an emission reduction target of at least 30% by FY 2030.
  • Committing an additional US$75 million to partnerships for decarbonising steelmaking customers.

To incentivise management towards achieving BHP’s climate goals, a component of executive remuneration is tied to climate-specific targets.

Shareholders will be hoping these targets provide better BHP share price returns than the past year. In the last 12 months, BHP shares have underperformed the benchmark index, rising only 4.4%.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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