These shareholder resolutions have been withdrawn.
This is the final wording of the shareholder resolution asking Rio Tinto (ASX:RIO) to suspend membership of industry associations that continue to advocate for the development of new and expanded coal mines.
Special resolution to amend our company’s constitution
To insert into our company’s constitution the following new clause 60A:
Member resolutions at general meeting
The Members in general meeting may by ordinary resolution express an opinion or request information about the way in which a power of the company partially or exclusively vested in the directors has been or should be exercised. However, such a resolution must relate to an issue of material relevance to the company or the company’s business and cannot either advocate action which would violate any law or relate to any personal claim or grievance. Such a resolution is advisory only and does not bind the directors or the company.
Supporting statement to Resolution 1 (616 words including footnotes)
Shareholder resolutions are a healthy part of corporate democracy in many jurisdictions other than Australia. As a shareholder, the Australasian Centre for Corporate Responsibility (ACCR) favours policies and practices that protect and enhance the value of our investments.
The Constitution of our company is not conducive to the right of shareholders to place ordinary resolutions on the agenda of the annual general meeting (AGM). In our view, this is contrary to the long-term interests of our company, our company’s Board, and all shareholders in our company.
Permitting the raising of advisory resolutions by an ordinary resolution at a company’s AGM is global best practice, and our fellow shareholders in Rio Tinto Plc already enjoy this right, as do shareholders in any listed company in the UK, US, Canada or New Zealand.
Australian legislation and its interpretation in case law means that Australian shareholders are unable to directly propose ordinary resolutions for consideration at Australian companies’ AGMs. In Australia, the Corporations Act 2001 provides that 100 shareholders or those with at least 5% of the votes that may be cast at an AGM with the right to propose a resolution. However, section 198A specifically provides that management powers in a company reside with the Board.
Case law in Australia has determined that these provisions, together with the common law, mean that shareholders cannot by resolution either direct that the company take a course of action, or express an opinion as to how a power vested by the company’s constitution in the directors should be exercised.
Australian shareholders wishing to have a resolution considered at an AGM have dealt with this limitation by proposing two part resolutions, with the first being a ‘special resolution,’ such as this one, that amends the company’s constitution to allow ordinary resolutions to be placed on the agenda at a company’s AGM. Such a resolution requires 75% support to be effective, and as no resolution of this kind has ever been supported by management or any institutional investors, none have succeeded. It is open to our company’s Board to simply permit the filing of ordinary resolutions, without the need for a special resolution. We would welcome this, in this instance.
We note that the drafting of this resolution limits the scope of permissible advisory resolutions to those related to “an issue of material relevance to the company or the company's business as identified by the company”, and that recruiting 100 individual shareholders in a company to support a resolution is by no means an easy or straightforward task. Both of these factors act as powerful barriers to the actualisation of any concern that such a mechanism could ‘open the floodgates’ to a large number of frivolous resolutions.
Passage of this resolution would simply extend to us a right already enjoyed by our Rio Tinto Plc counterparts.
ACCR urges shareholders to vote for this proposal.
Ordinary resolution on climate-related lobbying
Consistent with the board’s support for Resolution 20 at the Rio Tinto Ltd 2021 annual general meeting, shareholders request that our company suspend membership of industry associations that continue to advocate for the development of new and expanded coal mines.
Nothing in this resolution should be read as limiting the Board’s discretion to take decisions in the best interests of our company.
Supporting statement to Resolution 2 (939 words including footnotes)
ACCR acknowledges our company’s support for the Paris Agreement and welcomes its updated operational emissions targets and commitment to achieve net-zero operational emissions by 2050.
In 2021, our board recommended shareholders vote in favour of Resolution 20 at the Rio Tinto Ltd 2021 annual general meeting (AGM). Resolution 20 requested our company enhance its annual review of industry associations to ensure that it identifies areas of inconsistency with the Paris Agreement; and, suspend membership of industry associations where their record of advocacy is inconsistent with the Paris Agreement’s goals. Resolution 20 was supported by 99.04% of shareholders.
The International Energy Agency’s (IEA) ‘Net zero by 2050’ scenario concluded that no new coal, gas or oil developments can proceed beyond 2021, in order to limit global warming to 1.5°C. The IPCC’s Special Report on Global Warming of 1.5°C concluded that in the absence of, or with only a limited use of carbon capture and storage (CCS), the share of primary energy provided by coal must decline by 61-78% by 2030, and by 77-97% by 2050 (relative to 2010).
The 2021 IPCC Sixth Assessment Report—described as the “code red for humanity”—concluded that “we are at imminent risk of hitting 1.5°C in the near term” and that “the only way to prevent exceeding this threshold is by urgently stepping up our efforts and pursuing the most ambitious path.”
Yet several of our company’s industry associations continue to advocate for the development of new and expanded coal mines.
2021 Industry Association Review
In February 2021, our company published its latest industry association review. That review found the advocacy on climate and energy policy by the National Mining Association (US) was “not aligned” with our company. The review also found only “partial alignment” with the Minerals Council of Australia (MCA), the Queensland Resources Council (QRC) and the US Chamber of Commerce.
The review found that the MCA and QRC positions on the use of coal “do not consistently note it will require advanced technology” and are “not always consistent with the Paris Agreement targets”.
ACCR has engaged our company on the issue of climate-related lobbying for more than four years. Despite repeated assurances, our company has manifestly failed to constrain advocacy that encourages the continued expansion of the coal industry.
In 2021, InfluenceMap found that our company was one of the most actively engaged companies in Australia on climate and energy policy between 2018-21, scoring it D- (scale A-F) for its opposition to Paris-aligned climate policy.
Our company remains a member of at least six industry associations with climate lobbying practices that are misaligned with the Paris Agreement (ranked D+ or below):
|Industry association||InfluenceMap Performance Band|
|Australian Industry Greenhouse Network (AIGN)||D|
|Chamber of Minerals and Energy WA (CME)||E|
|Minerals Council of Australia (MCA)||E+|
|National Mining Association (US)||F|
|Queensland Resources Council (QRC)||E|
|US Chamber of Commerce||E-|
Of these, the MCA, the QRC and the National Mining Association (US) continue to advocate for new and expanded coal mines.
Australia’s lack of climate policy
In February 2021, Bloomberg ranked Australia’s climate policies as the weakest of the largest developed economies. In June 2021, Australia received the lowest score awarded to any of the 193 UN member states for climate action. In November 2021, Australia was ranked last out of more than 60 countries on climate policy by German think tank Climate Change Performance Index.
Australia continues to expand its coal mining industry. According to the Australian government’s Resources and Energy Major Projects report, Australia had 69 new or expanded coal projects in the investment pipeline as at 31 October 2021, valued at A$72-82 billion. Coal exploration expenditure in Australia in FY2021 was $235 million.
The MCA and the QRC are two of the strongest advocates for the continued expansion of Australia’s coal industry.
Ongoing pro-coal advocacy
Throughout 2020-21, the QRC advocated for further expansion of the coal industry as part of the Queensland government’s Resource Industry Development Plan, and recently claimed “Queensland coal mines should be the last coal mines closed in the world”.
In June 2021, the MCA published a report “Australian Export Thermal Coal: The Comparative Quality Advantages”, that claimed Australian coal could “reduce emissions” in Asia by displacing other types of coal. It also concluded that further research and development was required to further lower emissions from coal-fired power generation, rather than immediately transitioning to low or zero-carbon energy.
The MCA’s Climate Action Plan progress report in June 2021 focuses almost exclusively on actions taken by the mining industry to reduce their operational emissions. It ignored the emissions from coal combustion, and the MCA’s advocacy to ensure that the coal mining industry continues to grow.
In December 2021, the MCA was vocal in its criticism of the Australian Labor Party’s plan to strengthen the Federal government’s largely toothless Safeguard Mechanism. The MCA argued against more ambitious climate policy, claiming that reducing emissions should not come at the cost of international competitiveness.
Our company contributes approximately 15% of MCA membership revenue. Despite several years of shareholder concern around the MCA’s advocacy, there is little evidence to suggest that our company has affected any real change on its pro-coal advocacy.
Put simply, industry associations like the MCA and QRC—representing coal as well as other commodities—are no longer fit-for-purpose. Rather than continuing to fund advocacy aimed at coal expansion, our company’s industry associations should be focused, like its portfolio, on future-facing commodities.
ACCR urges shareholders to vote for this proposal.