Rio Tinto hit by emissions backlash at AGM

Rio Tinto has suffered a bigger-than-expected protest vote over its resistance to setting emissions targets for buyers of its products.

Rio Tinto chairman Simon Thompson says the company will continue to engage with shareholders on the emissions issue. Picture: Getty Images

Rio Tinto’s resistance to setting carbon emission targets for buyers of its products has been met with a substantial backlash from institutional investors.

Almost 37 per cent of votes at its annual shareholder meeting on Thursday backed a resolution calling on the company to match promises made by its major competitors.

The shareholder resolution, lodged by activist shareholder group Market Forces, failed to meet the heights of support achieved for a motion calling on Woodside to set greenhouse gas emission targets in line with the Paris climate change agreement, which won a majority of proxy votes at Woodside’s annual meeting on April 30, or the 43 per cent support for a similar motion from Santos shareholders earlier in April.

But it won far more support than even its backers hoped, after only 6 per cent cent of shares supported a similar resolution at Rio’s 2019 shareholder meeting.

The motion asked Rio to lay out plans for “short, medium, and long-term targets to reduce scope 1, 2 and 3 greenhouse gas emissions, and detailed strategies to meet these targets”.

But Rio has resisted setting scope three targets, those attributable to customers of its products, such as steel mills, arguing it cannot control the behaviour of downstream users of its products.

Market Forces executive director Julien Vincent said the vote “marks a significant hardening of investor attitudes”.

“Rio’s scope three emissions are massive – comparable to the carbon footprint of Australia. This is a staggering level of climate risk for any company, and hence for any investor, to bear,” he said.

“With rival miners such as BHP, Vale and Glencore having already committed to set scope three targets, Rio has no excuse for its current policy vacuum.”

In a statement, Rio chairman Simon Thompson said the company would continue to engage with its investors, and other stakeholders on the subject.

“Rio Tinto has had extensive discussions with shareholders on our approach to climate change. The majority of our investors are supportive of our overall approach and our position that it is not viable to set scope three emission reduction targets, as they relate to the emissions of our customers,” he said.

“We are working to reduce greenhouse gas emissions throughout the mining and metals value chain through partnership. We have established partnerships with our customers, peers and other stakeholders to reduce emissions and improve environmental performance across the value chains for both the steel and aluminium sectors. Rio Tinto believes the most effective climate change action will be delivered through partnerships between industry, government and society.”

Rio shares last traded at $81.51.