Rio chairman Dominic Barton resists scope 3 carbon targets, says it would risk ‘greenwashing’

Rio Tinto chairman Dominic Barton has again resisted calls for the company to set carbon reduction targets for the use of its commodities.

Rio Tinto chairman Dominic Barton has again resisted calls for the company to set carbon reduction targets for the use of its commodities, telling shareholders companies that set targets they cannot control risk accusations of “greenwashing”.

Rio remains an outlier among the major miners in refusing to set a target for its so-called “scope 3” emissions – those attributable to customers that buy its iron ore and other products – with BHP, Vale and Glencore all committing to reduction targets and Fortescue Metals Group having set the ambitious target of net zero Scope 3 emissions by 2040.

But Rio has resisted setting its own target, saying it could not control the pace of change in the global steel industry, which generates the bulk of Rio’s downstream carbon emissions.

Mr Barton reiterated that position on Thursday, telling shareholders at the company’s annual meeting of Australian shareholders in Perth that, while the company was committed to working with its customers to help the global carbon reduction effort, it was not prepared to set goals it could not control.

“We have very aggressive goals on scope 1 and scope 2. We’re completely committed to delivering a little over 30 million tonnes in reductions. Just to make it absolutely clear what our scope 3 carbon emissions would be – they’re about 584 million tonnes and that represents about 1 per cent of the global total,” he said.

“We can’t control what our customers do. We want to work with them, but we’re nervous about putting up numbers that we actually can’t control. It’s not an excuse for not actually wanting to work with them and drive things forward – it’s actually we do not want to do any greenwashing and we’re religious about that.”

Mr Barton also dismissed concerns that signs of weakness in the Chinese steel industry, which has led to a dip in iron ore prices over the last month, could weigh on the company’s outlook.

The iron ore price has traded above $US115 ($172) a tonne for much of 2023, but has recently dipped from $US125 a tonne at the end of March to levels around $US105 on Wednesday.

Morgan Stanley analysts said in a note this week that blast furnace curtailments in China suggested that the peak steel production period had ended early in 2023, and China’s steel production was “catching up with the reality of sluggish underlying demand”. But, speaking on the sidelines of the Rio annual meeting, chief executive Jakob Stausholm said China’s economy was still tracking for strong growth in 2023, in line with its 5 per cent target, regardless of short-term market movements.

“I’m not too worried about that. I actually find it very difficult to read much out of that latest news,” he said.

“The bottom line is there is demand for steel because China is growing, and it’s a great time China is opening up because as you know the rest of the world with high inflation is in a difficult spot with regards to growth.”

Mr Barton told reporters that China’s long-term growth outlook remained strong, as would steel demand, driven by further urbanisation and my growing demand for steel as part of the country’s decarbonisation plans.

“If you see the scale of what they’re doing on the wind turbines and so forth, it’s massive. I think we underappreciate the extent to which they’re driving it and you see that when you talk to the customers about their targets,” he said.

“China is about 66 per cent urbanised – that’s much lower than what you see in the US or Japan at 95 per cent.

“I think that is an opportunity.”

Rio Tinto shares closed up $1.37 to $110.14 on Thursday.