Rio Tinto

The company aims to reach net-zero scope 1 and 2 emissions by 2050 compared to 2018. Further, it has set interim targets to reduce scope 1 and 2 emissions by 15% by 2025 and by 50% by 2030.

Rio Tinto has integrated climate-related performance metrics into short-term incentive plans. The company has also conducted a comprehensive climate change scenario analysis using four different scenarios outlined by the Intergovernmental Panel on Climate Change (IPCC), extending from 2022 until 2050 and beyond. Further, the company has assessed the materiality of its climate-related risks and discloses the results of its scenario analysis in qualitative, quantitative and financial terms.

No leading practices were identified for this company.

Rio Tinto has a publicly available policy that covers the company’s position and engagement with all alliances, associations and coalitions of which it is a member. The company periodically reviews its membership in individual industry associations and discloses that it may choose to suspend its support or membership in industry associations that are found to oppose the Paris Agreement.

Rio Tinto has set targets to reduce its scope 1 and 2 emissions by 15% by 2025 and by 50% by 2030, and to reach net-zero scope 1 and 2 emissions by 2050, compared to 2018. While the net-zero goal shows the company’s ambition to align with a 1.5°C scenario, the company could increase its ambition to reach 1.5°C alignment even for its short- and medium-term targets. Moreover, the company’s emissions intensity has increased by 11.8% from 2017 to 2022. While this increase could be linked to an increase in production or challenges that the company has faced, being among the top ten emitters in the sector globally, Rio Tinto has to intensify its efforts to decarbonise its operations.

Rio Tinto’s Chief Financial Officer has recent professional experience related to climate change, but the company’s board lacks climate change expertise. The company has integrated short- and long-term actions in its low-carbon transition plan, but it can improve its disclosure of its planned long-term actions. Rio Tinto has some low-carbon activities planned under its ‘6+1 abatement projects’ (e.g. decarbonising electricity through repowering its Pacific operations, renewables deployment in Pilbara in Australia, ELYSIS partnership with Alcoa for zero-carbon aluminium smelting capacity) However, these activities are in the nascent stages and the company reports no growth plans or financial details for them. To improve its credibility and substantiate the development of its low-carbon business activities, the company should report their profitability, current size, growth potential and deployment details.

Rio Tinto invests and commits to aluminium recycling. However, its recycling centre is only expected to be operational in 2024. The company needs to develop a comprehensive plan for scrap reduction with quantitative targets and a timeline. It should also detail its method for implementing this plan. Moreover, the plan should be regularly monitored and its responsibility should lie with high-level employees in the company. Rio Tinto states that it is not focused only on one particular low-carbon technology but is taking a portfolio approach. However, the company should enhance its transparency by disclosing its research and development (R&D) expenditure in low-carbon technologies over the last three years.

While the company has a supplier engagement strategy, this applies to less than 30% of its total procurement. The strategy includes actions covering three types of engagement: information collection, collaboration and innovation, and engagement incentivisation. Rio Tinto’s customer engagement strategy, on the other hand, applies to 50% of customers related to its scope 3 emissions. However, neither of these strategies include emissions reduction requirements. As one of the largest aluminium producers in the world, Rio Tinto should encourage emissions reduction by shifting demand towards low-carbon alternatives and implementing action plans. Moreover, the company should publicly disclose a policy for engaging with trade associations on climate change and consider actively participating in initiatives for emissions reduction.

The company aims to reach net-zero scope 1 and 2 emissions by 2050 compared to 2018. It has also set interim targets to reduce its scope 1 and 2 emissions by 15% by 2025 and by 50% by 2030. Rio Tinto states that it does not set an overall scope 3 emissions target due to limited influence over customer production processes. However, the company should set targets to reduce its scope 3 emissions and increase its collaboration across the value chain.

Rio Tinto states that it is taking a portfolio approach and exploring several technologies to decarbonise its operations. However, the company does not disclose its R&D expenditure on low-carbon technologies. As many of its abatement projects are in initial stages, the company should provide more robust planning for the future to increase its decarbonisation credibility.

While Rio Tinto is transparent about its emissions intensity which has increased by 11.8% from 2017 to 2022. To get on track with a 1.5°C pathway, the company needs to deliver a 2.7% reduction in emissions intensity annually between 2022 and 2027. The company also needs to set a scope 3 emissions target and increase its engagement with customers and suppliers.

Rio Tinto provides information on its low-carbon capital expenditure but lacks data on its low-carbon R&D expenses. There is no evidence to show that the company is creating or expanding low-carbon business models or implementing actions to decarbonise activities within its existing models. Nonetheless, Rio Tinto plans to deploy renewable energy across most of its operations and is working on producing low-carbon aluminium through its ELYSIS partnership with Alcoa, which uses inert anodes for aluminium smelting processes.

Rio Tinto has a transition plan containing descriptions of relevant and achievable short- and long-term actions to achieve its emissions reduction targets along with the associated financial costs. The company also conducts a climate change scenario analysis and the results of the analysis inform its strategy.

No evidence was found of the company’s commitment to social dialogue or of the categories of stakeholders the company engages with on a just transition. Furthermore, no evidence was found to demonstrate the company’s ongoing social dialogue and meaningful engagement with affected stakeholders.
No evidence was found of the company undertaking low-carbon transition planning to mitigate the social impacts of the transition on workers, affected stakeholders and its business relationships. Additionally, no evidence was found to demonstrate the company’s engagement in social dialogue and with stakeholders in its just transition planning.

The company discloses actions it takes to create jobs. The introduction of its ELYSIS technology in Canada, for instance, will create an ecosystem of new opportunities and jobs. Additionally, the company discloses that its investment funds for the community in Oyu Tolgoi in Mongolia will create more than 480 permanent jobs. The company also discloses the measures it takes to ensure that these jobs embed equality of opportunity for women and vulnerable groups. In particular, it has a Transferable Pathways campaign and Women in Leadership programme, which has increased the recruitment of women. It also discloses that through its graduate programme in 2022, it hired graduates to fill 265 positions, of which 53.2% were roles occupied by women. Further, in Australia, Indigenous peoples made up 15% of the company’s graduate intake and 2.2% of its programme for vacation students. However, no evidence was found of the company committing to create and support access to green and decent jobs as part of the low-carbon transition.
No relevant disclosure was found of the company’s assessment of employment dislocation risks. Further, no public commitment by the company was found stating its intention to reskill and upskill workers displaced by the transition to a low-carbon economy. Additionally, no evidence was found that the company reskills and upskills workers in a way that ensures gender balance and inclusion of vulnerable groups.

No relevant disclosure was found to show if the company identifies the impacts of the low-carbon transition on social protection for workers and affected stakeholders, nor how it contributes to their social protection. Additionally, no evidence was found that the company expects its business relationships to contribute to the social protection of their workers and affected stakeholders.
No relevant disclosure was found to show how the company identifies any misalignment of its lobbying activities with policies and regulations that support the just transition, nor of the measures it takes to address misalignment. Furthermore, no evidence was found that the company lobbies for policies and regulations for green and decent job creation; retention, education and reskilling; and social protection for workers.

The company commits to respecting human rights and the ILO fundamental rights at work. However, there is no evidence to show that it expects its business relationships to respect the ILO fundamental rights at work. Further, the company has a process to identify, assess and mitigate salient human rights risks in its operations and supply chain. However, no evidence was found of the company disclosing the stakeholders whose human rights have been affected by its activities. The company has a grievance mechanism available to workers and external stakeholders.

The company commits to respecting the health and safety of its workers and expects the same commitment from its business relationships. However, no evidence was found of the company having a time-bound target for paying all workers a living wage. The company does not disclose the proportion of its direct workforce covered by collective bargaining agreements. Furthermore, no relevant disclosure was found of the company’s required working hours. The company discloses some indicators of workforce diversity, such as age and gender. However, no relevant disclosure was found of additional indicators of workforce diversity.

The company commits to protecting personal data, but no evidence was found of the company having a privacy statement regarding the collection, sharing and access to personal data. The company discloses its global tax strategy and the corporate income tax it pays in each relevant jurisdiction. It also has a policy prohibiting bribery and corruption, and it includes corresponding clauses in its business relationship contracts. However, the company does not have a lobbying and political engagement policy. The company specifies that it does not make political contributions, but no relevant disclosure was found of the company’s expenditure on lobbying activities.