A man walks on burning coals during a traditional fire-walking ritual in East China's Zhejiang Province on Wednesday. Known as lianhuo, the ceremony is traditonally performed in the belief it can prevent disease and disaster from befalling a village. Photo: IC

Is it better to criticize from inside the tent, to paraphrase former US president Lyndon Johnson's famously earthy line, or from outside? Aberdeen Standard and other shareholders want miner BHP to cut ties with industry groups at odds with Paris climate pledges. The $113 billion Anglo-Australian giant says it is already reviewing its memberships, but argues change can be promoted from within too. It's a quandary familiar to fossil fuel investors.

At annual meetings over the coming weeks, shareholders will grill boss Andrew Mackenzie's outfit over the company it keeps. That makes sense: the impact of negative lobbying is significant, and detrimental. It encourages companies to focus on the short-term - resisting carbon pricing, for example - rather than preparing for inevitable change.

It also makes for uncomfortable contradictions if companies like BHP talk up green goals, while paying others to undermine them. Such duplicity can be symptomatic of other governance troubles, and there's reputational risk too, so shareholders are right to be concerned.

Break-ups are underway. Exxon Mobil and Royal Dutch Shell have already announced high-profile exits. BHP left the World Coal Association after its last membership review in 2017.

But this hasn't altered the balance of power much yet. The UN-backed Principles for Responsible Investment said last year that of the 50 most powerful trade groups, organizations opposing climate policy outnumbered those supporting it by seven to one.

The question then becomes whether it is better to be inside pushing for change, or to cut ties altogether. Green-minded investors face a similar conundrum: can they exert more pressure by holding shares, or divesting? The answer depends on influence, and BHP is the biggest kid on the block. Take the Minerals Council of Australia (MCA). In 2016, BHP paid MCA A$1.9 million ($1.29 million), 17 percent of its subscription revenue. And yet MCA is only beginning to draw up a climate action plan.

BHP pushes back against shareholder criticism by pointing to its periodic membership review; that's insufficient. Excluding obviously problematic partners like Coal21 is not enough either. But Mackenzie has a plausible argument that he can make a difference from the inside. The miner can assuage investors by not only laying out organizations' positions and points of disagreement, but also setting clear goals for them, as it does for itself. That would leave less room for hypocrisy.

The author is Clara Ferreira-Marques, a Reuters Breakingviews columnist. The article was first published on Reuters Breakingviews. bizopinion@globaltimes.com.cn