Solution
Rochak answered on
May 12 2023
BHP Group
BHP Group
Climate-related risks
Introduction
The BHP Group is a large mining and oil business with operations in over 90 different countries. BHP Group is subject to a variety of hazards as a firm that extracts natural resources, including climate-related risks. For the business to be profitable and sustainable over the long term, it is crucial to recognise and manage these risks.
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BHP Group is a global mining and petroleum company
The company operates in more than 90 locations worldwide
As a natural resources' extractor, BHP Group is exposed to various risks, including climate-related risks
Identifying and managing these risks is crucial for the long-term sustainability and profitability of the company
Overview of Climate-Related risks
Climate-related risks refer to risks arising from the physical effects of climate change and the transition to a low-ca
on economy
These risks can be divided into two categories: transition risks and physical risks
Transition risks are associated with policy, legal, and technological changes that may occur during the transition to a low-ca
on economy
Physical risks are associated with the physical impacts of climate change, such as rising sea levels, more frequent and severe heatwaves, droughts, and floods
Both transition risks and physical risks can have financial and non-financial impacts on companies that are exposed to them
Managing climate-related risks is becoming increasingly important for businesses as the impacts of climate change become more severe and the transition to a low-ca
on economy accelerates.
Risks resulting from the physical consequences of climate change and the shift to a low-ca
on economy are refe
ed to as climate-related risks. Physical hazards and transition risks are two categories into which these dangers might be divided. Physical risks are linked to the physical effects of climate change, such as extreme weather events, while transition risks are related to the policy, legal, and technological developments connected with the transition to a low-ca
on economy.
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Transition Risks
Transition risks for BHP Group include regulatory and policy changes related to ca
on pricing, emissions standards, and environmental regulations.
Technological changes, such as the development of new renewable energy sources and ca
on capture and storage technology, could also impact BHP Group's operations.
Failure to adapt to these changes could result in reduced demand for BHP Group's products, lower revenues, and increased costs associated with compliance.
Ca
on pricing policies could also result in reduced demand for fossil fuels, which could impact BHP Group's business model.
Environmental regulations and emissions standards could increase compliance costs for BHP Group, reducing profitability and competitiveness.
Regulation and policy changes pertaining to ca
on price, emissions standards, and environmental laws are transition risks for BHP Group. The activities of BHP Group might potentially be impacted by technological advancements like the creation of new renewable energy sources and ca
on capture and storage technology. Failure to adjust could lead to a decline in the market for BHP Group's products, fewer earnings, and higher compliance costs.
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Physical Risks
BHP Group is exposed to physical risks associated with extreme weather events, including hu
icanes, floods, and droughts that could disrupt its operations and supply chains.
Changes in precipitation patterns and temperature due to climate change could have a significant impact on the company's operations, particularly in areas with high water stress.
These physical risks could result in reduced production, increased costs, and damage to BHP Group's infrastructure and assets.
BHP Group has identified these physical risks and is taking steps to manage them, including investing in infrastructure that can withstand extreme weather events and developing water management strategies.
Failure to adequately manage these physical risks could have significant implications for BHP Group's performance and reputation.
Extreme weather conditions including hu
icanes, floods, and droughts that could impair the company's operations and supply networks are physical hazards for BHP Group. Changes in temperature and precipitation patterns may also have an effect on BHP Group's operations, especially where there is a lot of water stress. These dangers could result in...