* BHP to set science-based targets next year
* Plans cautiously welcomed by church pensions investor
* CEO says measures could include recycling initiatives(Adds CEO comments, detail and investor reaction)
By Barbara Lewis
LONDON, July 23 (Reuters) - Leading resources company BHPwill invest $400 million over five years toreduce emissions, it said on Tuesday, becoming the first minerto pledge to tackle pollution caused when customers use itsproducts.
BHP is the world's biggest listed miner and biggest cokingcoal producer. Combined with iron ore, also mined by BHP, cokingcoal is used to make steel, producing millions of tonnes of CO2.
CEO Andrew Mackenzie said BHP would develop technology tocurb emissions both inside and outside the company.
From next year it will set a medium-term, science-baseddecarbonisation target, he said in a speech at an eventorganised by the Financial Times.
"We won't stop at the mine gate. We will also increase ourfocus on Scope 3 emissions," he said.
Emissions are divided into categories. Scope 1 and 2 coveran organisation's direct emissions and indirect emissionsgenerated by power it buys to run its operations.
Scope 3 emissions occur when a company's products are used,as in steelmaking.
Oil major Shell has also pledged to address Scope 3emissions, but many other resources companies have beenreluctant to confront what is a huge problem.
BHP says its Scope 3 emissions are estimated to be about 40times greater than its Scope 1 and 2 emissions.
'BREAKING OF RANKS'
Adam Matthews, director of ethics and engagement for theChurch of England pension, a BHP investor, said Mackenzie'sposition marked an important breaking of ranks.
"The key will be in the ambition of the targets they setnext year and also how this relates to the lobbying undertakenby the trade associations they fund," Matthews said.
BHP's closest rival, Rio Tinto, has saidScope 3 emissions are caused by its customers, especially inChina, and it has little control over them.
In an interview, Mackenzie told Reuters he could not yet bespecific about the new investment, but measures could includework on recycling.
Some in the industry have criticised BHP for a focus on bulkcommodities rather than minerals that are needed for electricvehicles, such as lithium and cobalt.
Mackenzie said BHP concentrated on the commodities it knewbest, including copper, which has a significant role in alower-carbon economy because of its usefulness as a conductor ofelectricity.
The company owns thermal coal mines, whereas Rio Tinto hassold off its thermal coal, thereby reducing one source of Scope3 emissions.
Mackenzie said that BHP's thermal coal accounted for lessthan 3% of revenue and is low-cost, implying that it would beamong the last to be closed down globally.
"We would simply be transferring the Scope 3 emissions tosomeone else," he said, though he added that this did not meanBHP would not decide to sell its thermal coal.(Reporting by Barbara LewisEditing by Alison Williams and David Goodman)