We engaged with Rio Tinto, the Anglo-Australian metals and mining company, to discuss a climate-related shareholder proposal at its 2020 annual meeting. The proponent called on the firm to disclose short-, medium-, and long-term targets and performance for its Scope 1, 2, and 3 greenhouse gas (GHG) emissions.
Rio Tinto had already announced several climate exchange targets, including a 30% reduction in its emissions intensity by 2030, a 15% reduction in absolute emissions by 2030, and net-zero emissions by 2050. The proponent, however, believed that the company’s stated approach was not aligned with the Paris Agreement. The proponent also highlighted the lack of Scope 3 emissions reduction targets.
When we met with Rio Tinto, the chairman explained that the firm’s business mix made it challenging to set meaningful Scope 3 emissions targets. Rio Tinto does not produce or sell carbon, so it cannot easily reduce its Scope 3 emissions by exiting a business line. In fact, most of its Scope 3 emissions relate to the use of the commodities it mines, which means a high exposure to the carbon-intensive activities associated with aluminum smelting and steelmaking. As a result, Rio Tinto has focused on developing partnerships to address the carbon intensity of steel and to evaluate the aluminum value chain.
We recognize Rio Tinto’s business-specific challenges but expressed the need for better disclosure about its partnerships, including explicit information on how these partnerships help reduce the company’s Scope 3 emissions. The company acknowledged it could be clearer about its partnerships’ objectives.
At this time, Rio Tinto does not appear to be in a position to set meaningful targets to reduce Scope 3 emissions, so we decided it was too early to support the binding shareholder proposal.