Why has BHP distanced itself from legal threat to environment groups?

Australian environment groups this week found an unexpected supporter in BHP, the world’s largest mining company.

BHP has defended green groups’ right to receive tax-deductable donations, in the face of a concerted push from both the federal government and the Minerals Council of Australia.

Given the influential role of the environment movement in Australia, and the legal precedent that NGOs and charities can be political, the big Australian evidently sees value in defending them.

Environment groups’ tax status

Environmental organisations in Australia have traditionally been able to claim tax-deductible status under both the Income Tax Act and the Charities Act, in recognition of the fact that the work these groups do has a clear public benefit. But this status has now come under threat.

The federal government issued a report in 2016 entitled Tax Deductible Gift Recipient Reform Opportunities, examining the administration and transparency of the environment groups. The ostensible aim of this report was to ensure that tax-deductible donations to environmental organisations were being used properly.

Among its key recommendations was that environmental organisations would be required to seek tax-deductible status directly from the Australian Taxation Office (ATO), and that they be registered as environmental charities in order to qualify. The report also recommended removing the list of environmental groups set out under the Income Tax Act.

Read more: Government inquiry takes aim at green charities that ‘get political

Controversially, the report also recommended that the ATO require environmental charities to spend at least 25% of their donation income on “environmental remediation work”, as opposed to campaigning or other activities. The government has subsequently indicated that it is considering increasing this percentage to 50%.

But the Minerals Council of Australia argues that environmental charities should be forced to commit 90% of their resources to on-the-ground environmental remediation, education and research, leaving only 10% for political advocacy.

Support within the LNP

Federal resources minister Matt Canavan has indicated his support for removing tax-deductible status from environmental organisations. In 2015 he stated:

…there are a large minority [of environmental groups] who are clearly engaged primarily in trying to stop fossil fuel development in Australia and I don’t think it’s right that Australian taxpayers, including people who work in the mining industry, be asked to fund those activities.

The Minerals Council of Australia has also backed the removal of tax-deductible status from environmental organisations, claiming that many of these groups are “not environmental organisations but rather professional activist groups whose objective is to disrupt and hamper the resources sector”.

The Minerals Council issued its own report documenting environmental organisations that is claims have committed or encouraged unlawful or unsafe activities or sought tax-deductible donations to support politically partisan activities.

The report specifically refers to activities by organisations including Greenpeace, the Australian Conservation Foundation, the Nature Conservation Foundation of NSW, the Australian Youth Climate Coalition, and Australian Marine Conservation, arguing that their activities are against federal law.

It is also important to note that environmental organisations are not the only groups to receive tax-deductible status. Other groups, such as the Institute for Public Affairs, which often campaigns on behalf of large organisations to remove environmental protections, also has this status.

Environment groups can be political

Legally speaking, there is no doubt that environmental charities and other NGOs do engage in political activities in addition to their focus on public welfare and the environment. This does not prevent them from being treated as charities.

Indeed, in the landmark High Court decision of Aid/Watch in 2011, the court specifically stated that where it is clear that public welfare is a primary motivation, the fact that the organisation also has political purposes is irrelevant.

On this basis, an environmental organisation can engage in activities to promote political change while still maintaining as its principal purpose the conservation or improvement of the natural environment.

Read more: Australia needs politically active environmental groups

Even BHP agrees. In response to the Minerals Council report, BHP announced that it holds a different view. It argued that environmental organisations should not be stripped of their tax-deductible status, because these organisations perform important advocacy roles for policy development in a democratic society.

Subsequently, 100 BHP shareholders have put forward a shareholder resolution through the Australasian Centre for Corporate Responsibility calling on the company to leave the Minerals Council of Australia. They argued that the Minerals Council’s position is directly at odds with “our company’s long-term financial and strategic interests”.

BHP has agreed to review its membership of the Minerals Council of Australia. It is not alone. In 2016, one of Australia’s largest emitters of greenhouse gas, AGL, left the Minerals Council, citing material differences in their respective policies on climate change and energy.

Environment groups should be allowed to do their work

At a time when we are facing a rapidly transitioning energy landscape – with the acceleration of climate change, renewable energy production, new technologies for unconventional gas extraction, and increasing concerns regarding groundwater depletion and contamination - environmental protection is a major public concern.

It’s hardly surprising that in a democratic framework, environmental organisations have become more politically active. They are striving to ensure that the research and education they conduct with respect to the environment is appropriately reflected within the Australian legal framework.

This work ultimately benefits all Australians. These organistions are constantly seeking to improve and protect the natural habitat in which we all live. In a democracy like ours, the work of these groups should not be drained of funding through changes to the taxation system.