Local Government Super co-files ACCR-organised Rio Tinto shareholder resolution

More than a hundred individual shareholders and three global asset owners including Local Government Super (LGS) have co-filed a shareholder resolution calling on Rio Tinto to review and fully disclose its relationships with industry bodies including the Minerals Council of Australia.

The resolution has been coordinated by the Australasian Centre for Corporate Responsibility (ACCR). It is expected to be heard at Rio Tinto’s UK AGM on 11 April and Australian AGM on 2 May, and calls on Rio Tinto’s board to “disclose industry memberships and amounts paid since 2012; evaluate whether industry association advocacy positions are consistent with the company’s policy and financial interests; and disclose to shareholders the triggers for exit of industry associations where the company’s interests are not served.”

The resolution has been co-filed by the $10 billion Local Government Super, the $4.1 billion Church of England Pensions Board and the $69 billion Seventh Swedish National Pension Fund (AP7).

“We were over 100 with the individual shareholders – small shareholdings they hold personally or through a SMSF or a company,” said Brynn O’Brien, ACCR executive Director. “… Given the partial success of our BHP resolution and the success in raising the issue of anti-climate lobbying as a concern for investors, we have only seen an increase in interest in our work from institutional investors and in particular, in Europe. That’s a recognition that the activities of the Australian lobby groups and the inaction of the Australian government have impacts for universal investors abroad. It’s a real concern with investors around the world about anti-climate lobbing, lobbying that gets in the way of our local and global ability to deal with this extraordinary challenge. This issue isn’t going away and pressure and scrutiny will only increase over the coming 12 months and beyond.”

LGS noted that as a long term shareholder in Rio Tinto, they would like a “better understanding” of the shareholder value received from Rio Tinto funding third party industry groups “whose energy and climate change policy stance seems entirely contrary to Rio’s stated formal commitment to the Paris Climate Change Agreement.”

“We feel that it’s important to be an active owner and with that you need to demonstrate what you’re doing,” said Bill Hartnett, head of sustainability at LGS. “Engagement can be at times hard, and the things with shareholder resolutions is to signal to the board that these issues are a concern to investors. It’s not necessarily a vote against them, but it is a concern and we’d like that to be addressed. It’s not just raising the point and forgetting about it, it’s to signal interest and continued monitoring of the issue.”

Adam Mathews, head of engagement for the Church of England Pensions Board also highlighted Rio Tinto’s stated support for the Paris agreement, saying “that position is undermined when industry associations and lobbying groups, financially supported by Rio Tinto, take contrary lobbying positions.  For Rio Tinto to be part of the solution to climate change requires consistency in all the company’s activities and from the organisations it supports to lobby on its behalf.”

Richard Gröttheim, CEO, AP7, noted that the fund has engaged in the implementation of the Paris Agreement as well.

“As long-term global investors we recognize that climate change will have detrimental impacts on the global economy,” he said. “Therefore, AP7 has engaged in the effective implementation of the Paris agreement. I find it unacceptable that companies directly or through their industry associations, are lobbying against effective climate policy and thereby jeopardizing the long-term value growth of our pension portfolios. We see global investor collaboration as key in reaching better transparency on companies’ political engagement.”