Oct. 24 (Bloomberg) -- A former Royal Dutch Shell Plc executive who is seeking election to the board of the world’s biggest mining company believes BHP Billiton Ltd. is underestimating the future effects of climate change.
Ian Dunlop, 71, once an advocate for the industry as chairman of the Australian Coal Association before turning to promoting climate change awareness, is standing for election to the board of Melbourne-based BHP at its annual general meeting today in London. Chairman Jac Nasser has told investors to vote against the nomination because Dunlop’s focus “primarily on a single issue will not add to the effective governance of the business,” according to the meeting’s notes.
“The very fact that Jac can say that demonstrates to me they don’t understand what climate is about,” Dunlop said in an interview yesterday in London. He’s scheduled to meet Nasser for talks before the vote. “This is not a single issue. This is an issue that’s going to permeate every single thing that BHP do.”
Most known reserves of fossil fuels will need to stay unburned to stop temperatures rising beyond a target that seeks to curb climate-change dangers, according to the United Nations. BHP produces thermal coal in Australia, South Africa, Colombia and the U.S. and has oil and gas operations in the U.S., Trinidad and Tobago, U.K and Pakistan.
“They face significant loss of shareholder value” if they choose to ignore climate change and “a real impairment to their ability to prosper in the longer term in a low-carbon world,” Dunlop said. The company may also be exposed to write-downs on the loss of value of fossil-fuel assets, he said.
BHP has assessed climate change and policy scenarios and has experience in these areas, the company said in an e-mailed statement. “The board agrees with Mr. Dunlop that climate risk is very important but believes that he does not meet the threshold for skills and experience and will not add to the effective governance of the business,” it said.
The United Nations has said combined global carbon targets are less than half what’s needed to curb the temperature rise in the industrial era to the international target of 2 degrees Celsius (3.6 degrees Fahrenheit). UN scientists said last month that humans have now emitted more than half the carbon permissible to remain within the 2-degree limit.
“Most of the mining industry is tied up in how the hell do we squeeze the last possible bit of juice out of the Chinese lemon,” Dunlop said. “If you sit and look at what’s going on, it’s patently obvious that the official world has not woken up to the realities of what we now have to deal with.”
Climate envoys from 194 countries are seeking to devise by 2015 a global deal to fight climate change that includes binding commitments from all nations. The treaty would come into force after 2020, replacing the current Kyoto Protocol, which set binding emissions targets only for developed countries.
BHP, listed in Sydney and London, will hold the Australian leg of its annual general meeting in Perth on Nov. 21. Dunlop said it will be difficult for him to win a seat on the board.
“It’s an uphill battle, the proxy advisors are not supporting it and that makes it hard,” he said. “On the other hand, investors are certainly curious. It’s engendering a lot of conversation about what is actually going on.”
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