Home > Media Release: Rio Tinto to face shareholder resolution as BHP sets Paris-aligned ‘scope 3’ emission reduction goals
Media Release

Media Release: Rio Tinto to face shareholder resolution as BHP sets Paris-aligned ‘scope 3’ emission reduction goals

12 September 2019

Rio Tinto Pilbara expansion. Cape Lambert and Dampier and Rail.

Thursday 12 September, 2019: Following BHPs confirmation that the public goals it will release next year for its “Scope 3” greenhouse gas emissions will be aligned with the Paris Agreement, externally verified and time-bound, environmental finance group Market Forces is turning its attention to rival miner Rio Tinto.

Market Forces has agreed to not lodge a shareholder resolution this year with BHP, which would have forced the issue of ensuring the company sets Paris-aligned targets to reduce all its emissions onto the company’s annual general meeting later this year, and will now support shareholders to file with Rio Tinto, urging them to improve on BHP’s commitment. 

“BHP’s principles give us hope the miner will actively manage down its massive carbon footprint on a trajectory consistent with holding global warming to 1.5ºC,” said Market Forces Executive Director Julien Vincent. 

“BHP will stake a claim to leadership here but frankly, this is just climate risk management 101. What matters now is where BHP sets the bar, and if it wants to keep investors at bay, we will expect targets that align with net zero emissions by 2050 and rapid reductions over the short-term.” 

“As with BHP, Rio Tinto’s scope 3 emissions are also massive – approximate to those of Australia. That’s a staggering level of climate risk for any company. Investors should expect, at a bare minimum, for Rio to issue clear Paris-aligned targets.”

Julien Vincent, Market Forces

“As with BHP, Rio Tinto’s scope 3 emissions are also massive – approximate to those of Australia. That’s a staggering level of climate risk for any company. Investors should expect, at a bare minimum, for Rio to issue clear Paris-aligned targets.”

“Scope 3” greenhouse gas emissions are those produced downstream of a company’s operations, as opposed to emissions produced on site or through purchased energy. BHP’s Scope 3 emissions make up 97% of the company’s carbon footprint, while Rio Tinto’s make up almost 95%.” 

Earlier this year, Rio Tinto resisted a resolution coordinated by Market Forces calling for Paris-aligned targets to reduce scope 3 greenhouse gas emissions, despite recognising that the need to decarbonise the steel sector ‘could materially affect’ the value of Rio Tinto’s iron ore business.

Market Forces is ready to test the company’s resolve once more.

“We have already prepared the paperwork to lodge a resolution at Rio Tinto’s 2020 annual general meeting,” said Vincent. “Nothing short of the release of Paris-aligned targets for all of Rio’s emissions will result in this resolution being withdrawn.” 

“To satisfy the Paris Agreement’s goals, greenhouse gas emissions from all sectors will need to fall significantly, reaching net zero by 2050. Companies like BHP and Rio Tinto can expect their customer bases to face significant cost pressures to reduce greenhouse gas emissions, in turn putting product sales at risk unless those emissions are managed down.” 

BHP is already facing a shareholder resolution from the Australasian Centre for Corporate Responsibility over its membership of lobby groups that advocate against strong action on climate change. 

Market Forces believes BHP’s agreement on Paris-alignment strengthens the case for it to suspend its membership of organisations that lobby against strong climate change action. 

“There is clear daylight between BHP and the rest of the mining and oil and gas industries. Most companies in heavy-emitting sectors don’t even want to measure and disclose scope 3 emissions, let alone manage them.”

In the days after BHP CEO Andrew Mackenzie gave a speech that first flagged the company’s scope 3 emission reduction goals, Yancoal, Fortescue Metals and Beach Energy all declined to follow suit. Petroleum industry association APPEA, of which BHP is a member, strongly rejected the notion of including scope 3 emissions in environmental assessments in Western Australia earlier this year. 

“The sad thing is that BHP actually does stand out from its peers before it’s even announced the actual targets. But that has more to do with the rest of the mining and oil and gas industries, whose stubborn recalcitrance to act on – if not plainly measure – their greenhouse footprint would make anyone look heroic.” 

“This only serves to underscore the need for BHP to run a mile from lobby groups that get in the way of Paris-aligned climate change action,” concluded Vincent. 

BHP’s climate principles will be publicly released as part of its annual report on Tuesday 17 September.