Ratified by 185 countries, the Paris Agreement aims to hold global warming to well below 2°C above pre-industrial levels and pursue a 1.5°C limit. Governments and markets are accelerating action in order to achieve these goals. At the 2020 AGM 37% of shareholders voted in favour of a resolution calling on Rio Tinto to produce independently-verified Paris-aligned
targets to reduce scope 1, 2 and 3 emissions. Since then, Rio Tinto has failed to update its inadequate scope 1 and 2 emission reduction targets, failed to reduce scope 1 and 2 emissions compared to the previous year, and failed to set any target to reduce
scope 3 emissions. Clearly, further investor support is required to ensure the company acts to align its operations with, and appropriately manage the risks posed by the low-carbon transition required to meet the climate goals of the
Paris Agreement.
Scope 1 and 2 emissions
In February 2020, Rio Tinto announced targets to reduce absolute scope 1 and 2 greenhouse gas emissions by 15% by 2030 from a 2018 baseline These targets fall well short of what can be considered consistent with the Paris Agreement. Following the Science Based Targets initiative’s Absolute Contraction Approach, alignment with the Paris Agreement’s 1.5°C limit would require a 50% reduction in Scope 1 and 2 emissions over the same timeframe. Rio Tinto has committed to the goal of reaching net zero greenhouse gas emissions by 2050. However, it is widely accepted that the pathway to net zero requires emissions to roughly halve by 2030. This is not an outcome our company has even acknowledged, let alone set targets to meet. Our company is also failing to deliver on the meagre emission reduction target set for our scope 1 and 2 emissions. Our 2020 annual report shows current levels of scope 1 and 2 emissions are 31.5 million tonnes of carbon dioxide equivalent (Mt CO2e), meaning they have not fallen over the past year.

Falling behind peers

Rio Tinto’s commitment to reduce scope 1 and 2 emissions by 15% by 2030 is significantly weaker than those imposed by several of our peers. For example: – BHP targets a reduction in scope 1 and 2 emissions of at least 30% (operated assets) from FY2020 levels by FY2030. – Vale targets to reduce scope 1 and 2 emissions by 33% by 2030 from 2017 levels. – Anglo American has committed to reduce emissions by 30% by 2030, compared to 2016 levels. – Fortescue Metals Group revised its targets in 2020 and has committed
to reduce scope 1 and 2 emissions from existing operations by 26% from 2020 levels by 2030. Glencore announced in December 2020 an emissions reduction target (scope 1, 2 and 3) of 40% by 2035 compared to 2019 levels. We do not claim any of these examples to be Paris-aligned, but they do exceed the ambition outlined by Rio Tinto.

Investor and regulator expectations

The Task Force on Climate-related Financial Disclosures (TCFD) published its final recommendations in 2017, designed to allow investors to “appropriately assess and price climate-related risk and opportunities.” Regulators and investors now expect companies to fully comply with the TCFD recommendations. Rio Tinto signed up as a supporter of the TCFD in 201716, but is yet to fully
comply with the recommendations. The TCFD recommends companies: “Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks” and “Describe the targets used by the organization to manage climate related risks and opportunities and performance against targets.” Elaborating on this recommendation, the TCFD states: “Organizations should describe their key climate-related targets such as those related to GHG emissions (...) in line with anticipated regulatory requirements or market constraints or other goals.” Australian regulators have repeatedly stated their expectations that companies disclose and manage climate risk, ASIC commissioner Cathie Armour reiterating these expectations in a February 2021 article19. We therefore encourage shareholders to vote in favour of this resolution.