The board of mining giant Rio Tinto has supported a resolution that requires much greater transparency in future on how it will deal with climate change risk.
The climate resolution, which will be put to shareholders at the company’s AGM in London in April, is the product of the ‘Aiming for A’ coalition, which ClientEarth supports. Similar resolutions were passed by both BP and Shell last year and have now also been filed with Anglo American and Glencore.
Climate risks… and opportunities
Welcoming the board’s decision to back the special resolution, which requires 75% support from shareholders to pass, ClientEarth lawyer Alice Garton said: “This is an encouraging move from Rio Tinto’s board. Carbon heavy companies are particularly exposed to the risks associated with climate change, like stranded assets and increased regulation, so it is essential that those risks, and the opportunities available, are communicated fully and openly to investors.”
Before receiving backing from the board, the resolution had received unprecedented support from major institutional investors, including four of the world’s ten largest pension funds.
Investor tool
Alice Garton added: “This resolution is a highly effective tool for investors. If it passes the 75% threshold then it will be legally binding. We hope Anglo American will follow suit in their AGM notice, allowing their shareholders to also vote to gain a much fuller picture of the company’s climate-related risks and opportunities.”
Climate Resolution
The resolution for all three companies is as follows:
Special resolution – strategic resilience for 2035 and beyond
“That in order to address our interest in the longer term success of the Company, given the recognised risks and opportunities associated with climate change, we as shareholders of the Company direct that routine annual reporting from 2017 includes further information about: ongoing operational emissions management; asset portfolio resilience to the International Energy Agency’s (IEA’s) scenarios; low-carbon energy research and development (R&D) and investment strategies; relevant strategic key performance indicators (KPIs) and executive incentives; and public policy positions relating to climate change.
“This additional ongoing annual reporting could build on the disclosures already made to CDP (formerly the Carbon Disclosure Project) and/or those already made within the Company’s Annual Report and Sustainable Development Report.”
The Local Authority Pension Fund Forum leads Aiming for A’s engagement with Rio Tinto. The Special Resolution will be voted on at Rio Tinto’s AGM on 14 April.
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