Rio backs green stimulus call ahead of activist shareholder meeting

Rio Tinto chairman Simon Thompson has backed calls for a ‘massive’ wave of green energy-focused stimulus measures..

Simon Thompson, Rio Tinto chairman. Picture: Getty Images

Rio Tinto chairman Simon Thompson has backed calls for a “massive” wave of green energy-focused stimulus measures to help global economies out of the coronavirus crisis.

The move comes as the company prepares to face down environmental activist groups at its Australian shareholder meeting on Thursday.

On Wednesday, Mr Thompson put his signature to a call for green energy-focused investment from the Energy Transitions Commission, a coalition of 40 global businesses including energy majors such as BP and Shell.

The group called on governments to support “a massive wave of investments in renewable electricity” and other low-carbon ­energy solutions when devising plans for the economic recovery from the COVID-19 pandemic.

In a paper released on Wednesday, the ETC said global ­governments should favour measures that targeted investment in renewable energy, the transition to electric cars and the “transition of the fossil fuels industry” as they looked at stimulus spending to boost economies.

The call includes a measure to target government support to businesses “conditional on climate commitments”, an issue likely to be at the top of Mr Thompson’s mind as he prepares for Thursday’s meeting.

Rio faces the latest stage in its running battle with activist groups and environmentally-minded investors at the meeting over so-called “scope 3” emissions — carbon emissions caused by the use of its products by customers such as steel mills, rather than those attributable to its own operations.

Rio has promised to meet net-zero carbon emissions by 2050 in its own operations, and reduce them by 15 per cent from 2018 levels by 2030, promising to spend $US1bn ($1.56bn) on carbon-­reduction measures over the next five years. But it has resolutely refused to set targets for its customers, despite peers such as BHP, Glencore and Vale agreeing to set scope 3 targets.

Australian climate pressure group Market Forces is backing a motion on Thursday asking 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”.

Rio’s board has recommended against support for the motion. A similar motion at Rio’s 2019 Australian annual shareholder meeting won just 6 per cent support.

But activists are hoping to triple that figure following institutional support for similar moves at other resources companies, and the favourable recommendation from proxy adviser ISS.

Even the most hopeful do not expect the levels 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. That vote followed 43 per cent support for a similar motion from Santos shareholders earlier in April.

Market Forces executive director Julien Vincent said in­dications ahead of the Rio shareholder meeting suggested it would win significant support.

“Record support for resolutions on Woodside and Santos needs to carry on into other companies with massive amounts of climate risk,” he added.

“Indications are that a significant proportion of shareholders will back this resolution calling for the company to set Paris-aligned targets to reduce emissions across its entire value chain.”