Important notice

A fuller set of our disclosures about the development of our latest 1.5°C scenario and its use can be found in the BHP Climate Transition Action Plan 2024, subject to updates of certain aspects of our assumptions and plans in the BHP Annual Report 2025, Operating and Financial Review 9.8 – Climate change and the content below should be read together with our Climate Transition Action Plan 2024 (CTAP 2024) and BHP Annual Report 2025.  

There are limitations to scenario analysis, including any climate-related scenario analysis, and it is difficult to predict which, if any, of the scenarios might eventuate. Scenario analysis is not a forecast and is not an indication of probable outcomes and relies on assumptions that may or may not prove to be correct or eventuate, and scenarios may be impacted by additional factors to the assumptions disclosed.  

Our latest disclosures

Our most recent climate-related disclosures and performance data can be found in the BHP Annual Report 2025, Operating and Financial Review 9.8 – Climate change and BHP Annual Report 2025, Financial Statements – note 16, ‘Climate change’. Also refer to the BHP CTAP 2024 for BHP’s climate change strategy, subject to updates of certain aspects of our assumptions and plans in the BHP Annual Report 2025, Operating and Financial Review 9.8 – Climate change.  

Our portfolio’s resilience 

To address transition climate-related risks, we are pursuing opportunities to increase our exposure to products that enable and support decarbonisation, electrification, urbanisation and a growing population. Simultaneously, we aim to minimise the risk of capital being stranded in a rapidly decarbonising world.  

Climate change, climate scenarios and the progress towards the global net zero transition are among the key drivers of decision-making that support our risk appetite and commodity outlook to inform strategy and corporate planning. Insights from commodity and portfolio reviews are presented to our Executive Leadership Team and Board. They inform major portfolio decisions and cascade through our planning processes, including how we allocate capital and how we unlock new business opportunities.  

Our strategy formation, capital allocation and planning processes enable deliberate and timely responses to the climate-related risks (threats and opportunities) to our portfolio. We seek to maintain a strong balance sheet and monitor our net debt and gearing ratio (the ratio of net debt to net debt plus net assets). This gives us the flexibility to respond to changing external factors, including climate-related risks, as they arise. This, coupled with our Capital Allocation Framework, enables us to execute our portfolio positioning decisions for the benefit of our stakeholders including shareholders.  

Our planning range  

We use our planning range (our long-term forecast of demand, supply and price across our commodities) for operational planning, strategy formation and investment decisions. It is comprised of three unique, independent planning cases: a ‘most likely’ base case, and an upside case and downside case that provide the range’s boundaries. These three cases reflect proprietary forecasts for the global economy and associated sub-sectors (i.e. energy, transport, agriculture, steel) and the resulting market outlook for our core commodities.  

While not expressly designed as climate scenarios, our planning range assumes most developed economies reach net zero around CY2050 (and other developing economies reaching net zero in CY2060 and CY2070), with different global gross domestic product assumptions and pace and drivers of decarbonisation policy and technology across the three planning cases. The modelled outputs of our planning range result in global CO2 emission pathways implying a projected global temperature increase of around 2°C by CY2100. We regularly make updates to our planning range, with an update of key assumptions and our analysis of potential implications expected during FY2026.  

To continue responding to changes in the external environment and help shape a more resilient strategy, we carefully monitor key signposts for economic, societal, political and technological changes that could materially move our planning range. We also regularly reassess our views on commodity and asset attractiveness.  

Our 1.5°C scenario  

Scenarios highlight different hypothetical pathways for the future and are not necessarily what we or others expect to happen. We use scenarios to explore different themes or end states to stress test business decisions and portfolio resilience.¹ In FY2024, as one aspect of our analysis, we developed a new 1.5°C scenario, benchmarked against external scenarios, to test the modelled impacts of potential pathways towards deep decarbonisation and the climate-related transition risks it would give rise to. We believe it is unlikely this pathway will eventuate, because of current trends and global efforts to date to address climate change.  

Our 1.5°C scenario uses aggressive assumptions around political, technological and behavioural change, particularly for hard-to-abate sectors, such as steel. For example, our 1.5°C scenario assumes that global energy-related CO2 emissions will peak by the mid-2020s and there will be a rapid rollout of steel decarbonisation technologies synchronised to technical and commercial readiness, with carbon capture utilisation and storage (CCUS) beginning in the mid-2020s, hydrogen-based direct reduced iron from the mid-2030s and electrolysis technologies from the 2040s. It also assumes that there will be strong policy pushes to enable rapid decarbonisation.  

We update our 1.5°C scenario analysis and associated portfolio resilience testing periodically, with our most recent assessment performed in CY2024 and presented in our CTAP 2024. As modelled in CY2024, our assessment indicated that the portfolio would be resilient under our 1.5°C scenario, while its impact would be different on each of our commodities: the value of our copper, potash and nickel assets increases relative to the base case of our planning range and offsets the effect to our portfolio from some downside risk to steelmaking coal (with some loss of value in steelmaking coal relative to the base case of our planning range and a marginal decrease in the value of our iron ore assets). At the time of the assessment, the net present value of our portfolio modelled under our 1.5°C scenario was approximately the same as under the base case of our planning range, indicating that we would be resilient in an accelerated transition to this 1.5°C outcome. It is important to note this does not account for changes that could be made or actions that could be taken if our 1.5°C scenario was to eventuate, such as harnessing new opportunities or mitigating potential financial impacts.  

In FY2025, while we continued to consider our 1.5°C scenario in our strategy formation, we did not consider it as a sensitivity in capital allocation processes.  

To provide further analysis of potential financial risks under a 1.5°C scenario, we have also reviewed an external scenario published by Wood Mackenzie aligned to a global average temperature increase limited to approximately 1.5°C and performed a price-only sensitivity using the latest operating plans for our steelmaking coal assets.  

Since our resilience assessment in CY2024, we have continued to position our portfolio of commodities and assets to create value for today and the future. In FY2025, BHP and Canada’s Lundin Mining formed the Vicuña joint venture to hold the Josemaria and Filo del Sol copper deposits located on the Argentina-Chile border. The Vicuña joint venture will create a long-term partnership between BHP and Lundin Mining to jointly develop an emerging copper district with world-class potential. This transaction aligns with BHP’s strategy to acquire early-stage copper projects as one of the levers to develop a portfolio of commodities that support the megatrends shaping our world, which we would expect to reinforce the resilience of our portfolio as a whole. 

For physical climate-related risks, we are undertaking studies to progressively identify, assess and quantify the potential future impacts to site operations and safety, productivity and estimated cost for our operated assets. These studies use a set of scenarios with average global temperature estimates that differ from that implied by our planning range or our 1.5°C scenario used to test resilience against transition climate-related risks, due to higher temperature outcomes usually being associated with greater physical climate-related risks. The scenarios we are considering in our studies of physical climate-related risks are intended to help inform a risk-based approach rather than reflect any view on future climate outcomes.  

Footnotes:

1. There are limitations to scenario analysis, including any climate-related scenario analysis, and it is difficult to predict which, if any, of the scenarios might eventuate. Scenario analysis is not a forecast and is not an indication of probable outcomes and relies on assumptions that may or may not prove to be correct or eventuate.  

Carbon pricing

We embed carbon prices within our planning range that inform asset planning, asset valuations and operational decision-making, including the prioritisation of operational GHG emission reduction projects.  

Our carbon pricing disclosures are provided in our BHP Annual Report 2025, Financial Statements – note 16 ‘Climate change’. 

The role of our commodities in the transition

The classification we have given to our commodities (described below) is intended to be an indicative approach pending clear and resolved methodologies for identifying key transition materials that contribute to the transition to a net zero economy and the calculation of the revenues they generate. We also acknowledge the classification focuses on the theme of enabling the transition to a net zero economy to mitigate climate change, and broader sustainability indicators in relation to how these commodities are produced are also important to consider. 

We believe steelmaking materials like iron ore and steelmaking coal also have an important role to play in the global transition to net zero. We expect the blast furnace with CCUS to be an important part of the journey towards the end-state objective of widespread near zero emission¹ steel, and it requires higher-quality steelmaking coal as an input. External analysis, such as the International Energy Agency’s net zero by 2050 scenario,² supports this view. 

• Classification: Climate Action 100+ Net Zero Standard for Diversified Mining, September 2023 
  • Definition: Key Transition materials 
  • Commodities: Copper, nickel
• Classification: FTSE Russell’s Green Revenues Classification System, v1.1, January 2024
  • Definition: Key raw minerals and metals 
  • Commodities: Uranium  
• Classification: BHP 
  • Definition: Future-facing commodities³
  • Commodities: Copper, nickel, potash 

Footnotes

1. 'Near zero emissions (for steelmaking or ironmaking)' is defined as 0.40 tonnes of CO2 -e per tonne of crude steel for 100 per cent ore-based production (no scrap), as defined by the International Energy Agency (IEA) and implemented in ResponsibleSteel International Standard V2.0 (‘near zero’ performance level 4 threshold). IEA (2022), Achieving Net Zero Heavy Industry Sectors in G7 Members, IEA, Paris, License: CC BY 4.0, which also describes the boundary for the emission intensity calculation (including in relation to upstream emissions).
2. International Energy Agency’s World Energy Outlook 2023, iea.org/reports/world-energy-outlook-2023.
3. Commodities that we determine to be positively leveraged in the energy transition and broader global response to climate change, with potential for decades-long demand growth to support emerging mega-trends like electrification and decarbonisation.