London AGM, 23rd October 2014: Chairman, thank you for the opportunity to speak in support of my nomination to join the Board of BHP Billiton (BHPB).

Ladies and gentlemen, my platform for election is the climate change and energy challenge we face, specifically its implications for BHPB shareholders.

I would like to congratulate Andrew Mackenzie and his team on the action they have taken since I raised these matters at last year’s AGM. With the articulation of a new climate change policy and extensive scenario analysis, BHP Billiton is setting the standard for the global resource industry, which is most encouraging.

But having claimed leadership, the Company must now face up to the real challenge. Despite the progress of the last 12 months, I believe that has yet to occur.

Climate change is happening faster and more extensively than officially acknowledged. The transition to low-carbon society will also occur faster than anticipated, posing serious risks for BHPB, but opening up unprecedented opportunities provided the need for rapid transformation is recognised in time.

The new policy is based on the Intergovernmental Panel on Climate Change’s (IPCC) assessment of the climate science. The IPCC conclusions are extremely important, confirming the science at a higher confidence level.

But the IPCC also has great weaknesses. The assessment is a consensus which only occurs every five or six years, meaning that much of the latest science is omitted and the outcome is inherently conservative. Further, it’s conclusions are damped-down politically.

Most importantly the IPCC does not quantify the big risks. These are the “tipping points”, caused by non-linear feedback loops, where the climate may flip from one relatively stable state to another far less conducive both to human development and to the economic stability so essential for BHPB’s prosperity. These are high-impact and what were thought to be low-probability risks. Unfortunately, these risks are now becoming reality in the Arctic, Antarctic, in the Oceans and elsewhere. Once they take hold, they may be irreversible.

This requires that prudent risk management go beyond the conservative IPCC view, recognize these big risks and take urgent action. But the Company’s risk management approach does not convey much sense of urgency. Likewise, the scenarios disclosed this year are too conventional.

The new climate policy has some serious inconsistencies:

  • “Limiting climate change to the lower end of the IPCC scenarios”, is inconsistent with avoiding dangerous impacts on shareholder value.
  • The view that: “ Under all current scenarios, fossil fuels will continue to be a significant part of the energy mix for decades” is dangerously optimistic unless there is far greater urgency given to making solutions such as Carbon Capture and Storage (CCS) work, and there is no sign of that.
  • Whilst the Company claims leadership, its industry associations, the Minerals Council of Australia, and the Business Council of Australia, continue to undermine any sensible policy development.
  • BHPB has gone with the corporate herd in not contesting the Australian government’s climate denialism and winding back of sensible policy.
  • Most importantly, by not acknowledging the urgency for change, major opportunities for shareholder value creation are being missed. The strategy adopted under “an enhanced incremental change from Business-as-Usual (BAU)” approach, which is, I believe, BHPB’s current position, is far different from that which should be adopted if urgent action is really accepted.

The prosperity of BHPB depends upon a stable and growing global economy. Growth now depends upon a rapid transition to a low-carbon world. Stability requires urgent action to make that transition in good order. It is no use waiting for the market, or government policy, to dictate the change, otherwise it will be too late, with the risk of substantial shareholder value destruction. Rather, proactive leadership is required to seize what is the greatest value creation opportunity in human history.

Ladies and gentlemen, the Board has recommended against my appointment on the grounds that my experience and expertise do not meet the requirements of a BHPB Non-Executive Director. There is no question that the existing directors are extremely competent in any conventional sense. However, these are not conventional times and those self-same conventional skills are, in my view, blinding the Board to the great changes already taking place in the climate and energy arena. The policy inconsistencies I have raised suggest that the Board is in need of further diversity and unconventional perspectives to complement its conventional skills.

I believe I am well-equipped to meet those needs.

So I appeal to you directly for shareholder support. Thank you for your consideration, and thank you, Chairman, for the opportunity to speak to the meeting.