Rio says climate change “at heart of strategy” after investors demand action

“Climate change… is the defining issue for our age, and is at the heart of our new strategy,” Chairman Simon Thompson said at the meeting.

The company in October announced a $7.5 billion plan to reduce emissions by 2030, seeking to halve its Scope 1 and 2 carbon emissions – direct emissions by the company and certain types of indirect emissions – by the end of the decade.

The group had not however detailed how it intended to cut Scope 3, or customers’ emissions, but said it is working with partners.

“Considering Rio Tinto’s heavy Scope 3 footprint, (which) counts for 95% of total emissions, the absence of concrete targets stands out as a concern,” said proxy advisory firm Institutional Shareholder Services (ISS), which provides voting recommendations for shareholders.

Investment manager Sarasin and Partners voted against Rio’s financial accounts and the reappointment of auditor KPMG, saying it is unclear how the costs of achieving carbon commitments have been incorporated in the company’s financial statements.

Investors at the AGM also questioned Rio repeatedly about its Madagascar mineral sands operation, QIT Madagascar Minerals (QMM).

Thompson said QMM had to release water from the mine site into the surrounding environment due to unusually heavy rainfall in the first months of this year.

Dead fish were found after the water release, but the company’s tests on the fish found no signs of toxicity or contamination with heavy metals, he said.

Madagascar media reported that communities living near QMM had protested at a nearby town hall and that the water ministry was investigating the water release.

Thompson said Rio is planning a water treatment plant and developing clean water projects for the communities around the mine. “I absolutely accept that we have work to do to enhance our licence to operate in Madagascar,” he added.

Rio is dual-listed in London and Sydney and votes from the meeting will be counted and made public at its Australian AGM in Melbourne on May 5.

The company recorded its best ever annual profit in 2021 and gave shareholders a record full-year dividend of $16.8 billion, boosted by higher iron ore prices and strong demand from top consumer China. Rio also resolved a long-standing dispute with Mongolia to advance its huge Oyu Tolgoi copper project.

Its reputation has however suffered from a report it published in February laying bare bullying, racism and sexism in the company, and the shutdown by the Serbian government of its lithium project in the country.

The company’s destruction in 2020 of 46,000-year-old rock shelters at Juukan Gorge in Australia to expand an iron ore mine also caused public outcry.

Dominic Barton, a former diplomat, joined the board on Monday and will take up the role of chairman in May, replacing Thompson, who has held the role for four years, and who is the latest of many high-profile departures over the blasts.

“We have a lot of work to do – but I believe we are on the right path,” Stausholm told the AGM.

Investment manager abrdn abstained on voting to approve Rio’s annual reports and accounts, citing the “nature, severity and systemic impacts of the issues raised” in the workplace culture report.

“If we do not see progress against the milestones set by the company we will take further actions,” abrdn stewardship director Andrew Mason said in a statement.

(By Clara Denina and Helen Reid; Editing by Kirsten Donovan and Jan Harvey)