Super giant HESTA demands review of Rio Tinto deals with owners
Superannuation heavyweight HESTA has strengthened calls for an independent review of Rio Tinto’s agreements with traditional owners.
Superannuation heavyweight HESTA has strengthened calls for an independent review of Rio Tinto’s agreements with traditional owners in the wake of an executive clear-out following the destruction of Juukan Gorge in Western Australia.
HESTA, which manages $52bn of assets on behalf of 860,000 members, said systemic risks remained at the mining giant despite the management overhaul, including the exit of chief executive Jean-Sebastien Jacques.
“Changes in senior leadership should not distract from the need for an independent and transparent review of all current agreements between the company and traditional owners,” HESTA chief executive Debby Blakey said.
“The nature of these agreements and how they are negotiated represents a systemic risk for investors that will not be mitigated by executive changes. HESTA is seeking the support of major global investors to strongly encourage the Rio board to urgently consider this matter.”
Californian superannuation giant CalSTRS, the 11th-largest pension giant in the world, has agreed to publicly support a review, HESTA said.
“The board has yet to adequately demonstrate to investors that they have appropriate governance and oversight arrangements in place to manage this risk,” Ms Blakey said.
“An independent, transparent review by a suitable expert such as Professor Allan Fels would be appropriate to give investors confidence that this systemic risk is being adequately assessed and that the board is committed to open and accountable improvement in their management of these issues.”
Superannuation body Responsible Investment Association Australasia said the Rio Tinto scandal had uncovered systemic issues within the mining industry over their approach to cultural heritage.
The industry organisation, which counts AustralianSuper, HESTA and UniSuper as members, said investors had been shocked by the destruction of the Juukan Gorge site.
“This tragic event has uncovered systemic issues around how mining companies approach matters relating to cultural heritage, including how they engage with traditional owners,” RIAA chief executive Simon O’Connor said.
“Many responsible investors will be scrutinising much more closely the activities of all resources companies, to seek assurance that there are rigorous processes and practices in place which can prevent an event like this happening again in the future.”
AustralianSuper backed Rio’s appointment of Simon McKeon as senior independent director as a first step to boosting its Australian board representation and ensuring a greater awareness of the nation’s cultural identity.
As one of three Australia-based directors, Mr McKeon, a former Macquarie banker and AMP chairman, will be appointed to the role following ongoing criticism Rio’s board is too London-centric.
AustralianSuper “expects that this is the first step in ensuring the board is more Australian-focused and has a greater sensitivity to the nation and its cultural identity”, AustralianSuper chief executive Ian Silk said.
“Rio can now work with traditional owners to guarantee that its processes are appropriate for the protection of culturally important sites and that it has the right internal accountabilities. We will continue to take an active interest in how these changes are implemented.” Mr Silk had previously told Rio the financial penalties announced after a board review were well short of what was appropriate, and said the executive clear-out on Friday was the right move.
“No action by Rio Tinto can undo the destruction of the profoundly cultural significant sites in the Juukan Gorge and the impact of the traditional owners of the land, the PKKP people,” Mr Silk said. “AustralianSuper is satisfied that appropriate responsibility has now been taken by executives.”
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