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Grovelling apologies fail to get Rio Tinto out of a hole

As acts of corporate vandalism go, Rio Tinto’s obliteration of a spiritual site in Western Australia is right up there. The expansion of an iron ore mine intentionally damaged a cavern consisting of 46,000 years of human history. It had yielded a 4,000-year-old hair plait that showed a direct hereditary link with living descendants.

The scandal has already cost Rio Tinto a chief executive, Jean-Sébastien Jacques, and other managers, however the reaction from the destruction of the Juukan Gorge is still resounding, as the remaining executives at the FTSE 100 miner will find at its yearly meeting on Friday.

Investors appear to be rallying to provide Rio Tinto another bloody nose. Large executive payoffs are especially in the spotlight. Glass Lewis, Institutional Shareholder Solutions and Pirc have all recommended their huge investor customers to vote down Rio Tinto’s remuneration reports since of the payouts granted to Jacques.

ISS said Rio Tinto ought to utilize its power to claw back more of Jacques’s benefits. He still held on to shares worth ₤ 27m, ISS stated, regardless of having had ₤ 2.7 m taken away last summer season.

Rio Tinto has actually invested the last few months doing its finest impression of a grovelling corporate apology in an effort to encourage upset financiers that the business performs in fact care about standard owners of the Australian lands it wants to mine. Last week it held “cultural heritage” workshops and belatedly designated a native advisory group.

The annual meeting might yield more changes. Revolts over pay are not a brand-new phenomenon (even if fitful hopes that “shareholder springs” will lead to significant executive pay cuts have so far shown false), but a newer pattern will also be evident on Friday: increased pressure for climate action.

Financiers are likely to back an investor resolution calling for emissions-cuts targets along with an advisory resolution that states the business needs to suspend subscription of lobby groups whose policies oppose the Paris climate objectives.

Rio’s under-pressure board has given the climate resolutions its backing– although it has said it will not set gold-standard science-based targets. Experts are generally sceptical of business pledges to cut carbon emissions if they are not science-based.

The most recent resolutions might not be the most burdensome for the business, but they will provide it fewer hiding places in future as pressure for real emissions cuts ramps up.

Polling by Interactive Financier, an online platform, recently revealed that 70% of 1,000 retail investors surveyed said they would back a higher focus on environment issues. Those measures would consist of adding environment metrics to reward computations, along with targets on “cultural heritage management”.

An identical percentage of the surveyed investors said that they believed company chairs and chief executives must be held to account on environmental, social and governance problems, Interactive Financier said.

Retail investors may hardly ever tip the scales in business votes, offered the size of big institutional shareholdings, however the scale of worry reveals that executives can not just hide ecological or social concerns in dull sustainability reports buried on their websites.

Rio Tinto’s replacement president, Jakob Stausholm, struck a philosophical tone last week on the Juukan Canyon fiasco, commenting on the temporary nature of human existence. However there are indications that harder analysis of environmental or social debacles might be here to stay.

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