Setting a new standard: Rio Tinto commits to improved disclosure of plans to rein in emissions from iron ore processing

The Australasian Centre for Corporate Responsibility​ (ACCR)  and PFA Pension Fund are commenting on Rio Tinto’s commitment to enhance company disclosures on how it plans to reduce scope 3 emissions from processing iron for steel production.

As with all iron ore miners, scope 3 emissions from the use of metallurgical coal in the processing of iron ore for steelmaking account for the vast majority of Rio Tinto’s emissions.

Following engagement with ACCR and other investors, Rio Tinto has committed to significantly enhancing its disclosures prior to the 2025 AGM, including its forward capital expenditure on steel decarbonisation, known milestones, timelines and potential abatement opportunities.

ACCR recently released research into the global green steel transformation, including detailed analysis of the four iron ore companies responsible for 41% of global iron ore production, and understands this is the first such commitment from an iron ore operator globally.

Commenting on Rio Tinto’s commitment, Naomi Hogan, Company Strategy Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:

“This is a significant announcement from Rio, one that sets a new standard for iron ore producers globally and will be widely welcomed by investors.

“This outcome is the result of constructive company responsiveness to a draft shareholder proposal and demonstrates the roles investors can play in shaping climate related disclosures.

“Scope 3 emissions, predominantly from steel making, account for more than 95% of the total emissions footprint of iron ore miners, posing significant business risks in a decarbonising global economy. Rio’s investors will now be ahead of the curve and gain strategic insights into how the company is planning to tackle this challenge, which is an important first step to helping ensure capital is being allocated towards the best opportunities.

“This outcome should help Rio on its path to unlock large emissions reductions and also better assure long term value through the energy transition.

“These disclosures will help address one of the key barriers to decarbonisation of the sector, which is a lack of detailed information around the allocation of capital specifically towards steel decarbonisation. Investors need to see and measure where companies are investing and prioritising actions towards scope 3 emissions reductions.

Rasmus Bessing, co-CIO and head of ESG investments at PFA, said:

"It is very positive that Rio Tinto is stepping up its green commitments and a victory for the climate.

“On the one hand, the mining and steel industries are vital for the green transition, because they supply metals and minerals which are included in wind turbines or electric cars. On the other hand, the industry also has a significant CO2 footprint, which it is crucial to reduce.

“The transition towards a greener mining sector is a long haul, but Rio Tinto's new announcement shows that constructive dialogue and active ownership produce results."

Background

About PFA

PFA is Denmark’s largest commercial pension provider with 1,3 million customers and 90 billion USD in assets under management. Founded in 1917 by the labour market operators, PFA’s core mission is to provide financial security, a good senior life, health solutions and contribute to a sustainable society. PFA supports the Paris Declaration and have over number of years invested in green technologies such as wind and solar power. PFA has currently reduced the carbon footprint from investments in listed shares, properties and credit bonds by 40 percent since 2019.

The ACCR draft resolution for iron ore producers

Steel decarbonisation resolution for 2024 AGMs

In light of the commercial imperative to be well positioned as global demand shifts towards green steel, shareholders request the Company provide additional disclosures about its plans for Scope 3 emissions reductions from processing iron ore.

In order to promote market confidence, these disclosures should address:

• planned capital allocation for steel decarbonisation investment over the forward 3-5 years, along with the estimated emissions reduction impact of each investment
• the Company’s plans for delivering net zero emissions from iron ore processing by 2050,
• including timelines, investment priorities, and governance oversight
• optimal policy settings that would promote emissions reductions across the steel value chain.

These disclosures should initially be published before the Company’s 2025 AGM. Thereafter, they should be updated alongside company reporting in each year that material changes are made. This should be undertaken at reasonable cost and omit commercial-in-confidence information.

Nothing in this resolution should be read as limiting the Board’s discretion to take decisions in the best interests of the Company.