Rio Tinto investors voted against the company’s financial statements due to a lack of clarity on climate change risks at the mining giant’s annual general meeting in London.
Ahead of the vote, investment management firm Sarasin & Partners said it intended to vote against the company’s financial statements, against retaining accounting firm KPMG as auditors and questioned the performance of the committee. company audit.
A memo from the company’s chief steward, Natasha Landell-Mills, said Rio Tinto had not disclosed key details about how it would transition to a zero-carbon economy.
“While Rio has stepped up its discussion of climate risks and made clear that its accounts are not aligned with 1.5C, providing welcome transparency, it does not provide disclosures on its quantitative assumptions, nor visibility on the how it would be affected if its own statements the goal of being aligned with 1.5C was achieved,” Landell-Mills said.
The memo did not say the company was voting against the company’s climate statement.
Auditors are key to making investment decisions and any failure to identify, discuss and disclose whether a company is able to meet its climate commitments, and the risk of stranded assets, means investors will be left behind.
Rio Tinto’s largest source of carbon emissions are scope 3 emissions – emissions created by assets not owned or controlled by the reporting organizations.
As the smelters responsible for turning its iron ore into steel operate in China, Japan and South Korea, and are not owned by the company, the mining giant has so far resisted the imposition of a Scope 3 emissions target.
But investors are increasingly pressuring the company to act.
An assessment by the Australasian Center for Corporate Responsibility (ACCR) of Rio Tinto’s climate statement found that despite progress elsewhere, the company was not doing enough of these emissions.
He also found that Rio Tinto maintained memberships in industry associations that lobbied against climate action.
Dan Gocher, ACCR’s climate and environment director, said the company is not disclosing voting figures from its London and Australian general meetings, making it difficult to tell the exact level of opposition. .
“There was probably some investor backlash to Rio Tinto’s climate report overnight, mainly because Rio didn’t set Scope 3 emissions targets, which it resisted for many years. years,” Gocher said.
“It has, however, made very significant commitments at the end of 2021 to reduce its operational emissions and has allocated significant capital expenditure to achieve this.
Glenn Walker, a campaign manager for Greenpeace Australia, said it was “absolutely wild” that how investors voted had not been made public.
“Transparency is key,” Walker said. “There should be an open file on who votes on what at the AGM and shareholder meetings so we can hold investors accountable for their climate commitments.”
Walker said this year would mark a test for investors and audit firms on the sincerity of their commitment to assessing climate risk and taking action to mitigate it.
Following unhappiness from investors in the UK, he said Rio Tinto was given notice ahead of its general meeting in a month – along with the rest of Australian companies.
He said a vote expected in two months by AGL asking its shareholders for permission to spin off its coal assets into a separate company was a critical moment for companies that signed on to the Net Zero Asset Managers initiative.
“We’ve seen a lot of great statements, but that’s where the rubber hits the road,” Walker said. “This is a real big test for these investors and their auditors on their climate commitments.
“Our view is that they shouldn’t let the split continue because they want to keep burning coal until 2045.”
Rio Tinto has been contacted for comment.