The Rio Tinto Limited annual general meeting took place on Tuesday May 2, 2018. ACCR Executive Director Brynn O'Brien spoke in support of our resolution as did Bill Hartnet, Head of Sustainability at Local Government Super. Along with the Church of England Pensions Board and the Seventh Swedish National Pension Fund (AP7), Local Government Super was a cofiler of our resolution.
Our resolution received a record 18.03% vote in favour (over 20% including abstentions), the largest shareholder revolt on climate in Australian corporate history! Read the ASX announcement here.
You can read Brynn's remarks at the AGM below:
I should say at the outset that, without board support, we have never expected this vote to succeed on the numbers.
But this is a reasonable resolution which our company's board has missed an opportunity to support.
A number of our company’s major investors have encouraged us to take credit for being able to shift the dial, even a little bit. The expectations of many of your investors, in particular in this country, are low.
But the co-filing group has higher expectations of Rio Tinto. So do those funds which have publicly declared support for the resolution, which I can now say represent assets under management of over three and a half trillion dollars. For context, this is roughly double the market cap of the ASX.
A note about what we asked for, and how you have responded:
- We asked for the most basic transparency about your relationships with fossil fuels lobbyists: a full list of the organisations you belong to and the cost of those memberships. You have resisted.
- We asked for an evaluation of the advocacy done by these organisations, using shareholder funds, and their impacts on the company’s interests, but you have resisted.
- We asked for the board to disclose to shareholders the criteria against which relationships with lobbyists would be ended. For example, if a lobby group campaigns for a government to exit the Paris agreement on climate change, will you exit? Even on this measure, You have resisted.
How have your lobbyists responded? For one, the Minerals Council of Australia have had to be dragged kicking and screaming in order to make the most basic references to Paris and to emissions reductions in their their climate and energy policy. You have roundly praised them.
But if you conduct a thorough and objective evaluation of the MCA’s advocacy, even after the policy statement was made, you will see that they have persisted in campaigning for new coal fired power in Australia, against our company’s interests. It is risk management 101 to go beyond policy statements and to evaluate advocacy activities and outcomes. The commitments made by Rio Tinto in the lead up to this AGM give us no confidence that such an evaluation will ever be conducted. Not to do so is reckless at best.
As for the US chamber of Commerce? They are the lobby group which campaigned for President Trump to withdraw the United States from the Paris agreement, and they won. Funded in part by Rio TInto and its shareholders, the US Chamber precipitated what may prove to be the single most destructive act taken by any government in terms of our global ability to limit global warming to 2 degrees. Funded by Rio Tinto and its shareholders.
There are other organisations of which our company is a member which actively campaign against our company's interests, and the point is this: a full and proper evaluation, an unvarnished evaluation, if you will, against objective criteria for exit, the development of which we have entrusted to the board, is a reasonable, sensible, and prudent way forward.
And this is why: in the face of all the available evidence, they persist. Let me be clear: the global fossil fuels lobby has one objective: to slow the world's transition to a low carbon economy. And they are winning. In Australia, in the space of just five years, we have gone from global leaders on climate and energy policy to global laggards. The global fossil fuels lobby, which wraps itself up in more palatable issues, like taxation, like health and safety (and I emphasise that the mixing of these things is deliberate) has a single aim: to slow our transition to a low carbon future. They know that the end of fossil fuel dependence is coming, and it is in their rational self interest to slow it down.
There is only one thing that can prevent catastrophic global warming: accelerating our transition to a low carbon economy. It is in Rio TInto’s interests - especially now that the company has exited coal - to accelerate this transition. Or at the very least, to not stand in its way.
In this sense, the interests of fossil fuels lobbyists and the interests of Rio Tinto are fundamentally misaligned.
In many respects, the damage has been done. And just a brief moment to note that the damage goes beyond the energy sector. Funded by shareholders, the Minerals Council has been a vocal attacker of the ability of civil society organisations to advocate on public policy issues. The democratic space in Australia is shrinking, and the Minerals Council, funded by shareholders, should take much of the blame.
As for Rio Tinto’s approach to our co-filing group: At every turn, you have sought to downplay our concerns. You have resisted genuine engagement with the substance of the resolution. Again and again, we offered the company chances to treat our concerns seriously, to negotiate a sensible way forward, including on components of the resolution, and yet... here we are.
The voting results may well reveal that you have benefited from the complacency of the Australian investment sector, but I believe that the voting results will demonstrate that you have been rebuked in no uncertain terms by responsible investors in Europe and the United States. This should be a moment of self reflection not only for you but also for those Australian investors, particularly super funds, who mistakenly believe it is in their members’ best interests to vote against this proposal.
The board should have supported resolution 20. I commend it to my fellow shareholders.