Investors welcome Rio resignations

Chief executive of Rio Tinto, Jean-Sebastien Jacques, will step down following pressure from investors and indigenous leaders over the destruction of the Juukan Gorge in May.

Rio Tinto said the decision was made following the board review?of the company's cultural heritage management and engagement with investors, shareholders and the traditional owners of the land.

Jacques will step down in March 2021, or when a new chief executive has been elected; whichever arises sooner.

Additionally, Chris Salisbury will step down as chief executive, iron ore with immediate effect and Simone Niven will step down as group executive, corporate relations, effective 31 December 2020.

The Australian Council of Superannuation Investors (ACSI) welcomed the announcement of the executive departures by Rio Tinto in light of the destruction of culturally significant sites in the Juukan Gorge.

ACSI chief executive Louise Davidson said: "Despite a drawn out process, we feel the board has listened to investors and other stakeholders and taken appropriate steps to ensure executive accountability for the systemic failures that led to the disaster at Juukan Gorge."

"Rio Tinto now has the opportunity to address the necessary remediation, cultural heritage and risk processes with fresh eyes."

Davidson called on Rio Tinto to prioritise working with traditional owners the Puutu Kunti Kurrama and Pinikura people to rebuild their relationship.

"It is critical that this is not delayed. We are pleased to see there is greater recognition that the board must increase its connection with Australian operations and communities. This work will be ongoing and must be a feature of future appointments to the board," she said.

HESTA CEO Debby Blakey also welcomed the decisions, but noted that changes in senior leadership "should not distract from the need for an independent and transparent review of all current agreements between the company and Traditional Owners."

In August, HESTA released a Statement on Working with Indigenous Communities detailing its investor expectations around how companies manage risks associated with Indigenous heritage protection issues and has written to 14 Australian mining and energy companies.

At that time, HESTA informed the companies it is embarking on a direct engagement program on this issue. The engagement will focus on how companies assess and mitigate risks, how closely this aligns to their public statements and where the accountability for these actions rest. The results of meetings will inform how the fund could use shareholder resolutions or voting to seek change, HESTA said.

"The nature of these agreements and how they are negotiated represents a systemic risk for investors that will not be mitigated by executive changes," Blakey said of the resignations. "HESTA is seeking the support of major global investors to strongly encourage the Rio Board to urgently consider this matter. Already, CalSTRS - the 11th largest public pension fund in the world, has agreed to publicly support a review."

Blakey said the board had yet to adequately demonstrate appropriate governance and oversight arrangements in place to manage this risk.

"An independent, transparent review by a suitable expert such as Professor Allan Fels AO would be appropriate to give investors confidence that this systemic risk is being adequately assessed and that the Board is committed to open and accountable improvement in their management of these issues," Blakey said.

Chief executive of the Responsible Investment Association Australasia (RIAA), Simon O'Connor also welcomed the news of the executive changes.

"Many investors were shocked by the destruction of this unique Aboriginal cultural heritage site, which exposed large failings in the Rio Tinto's internal processes to deliver upon its commitments to protecting Indigenous heritage," O'Connor said.

"RIAA members along with many other investors in Rio Tinto, have sent a clear message that such destruction is simply unacceptable and requires a more appropriate response than what we've been seeing."

O'Connor added that the event has uncovered systemic issues around the approach mining companies take to matters relating to cultural heritage, including how they engage with traditional owners.

"Many responsible investors will be scrutinising much more closely the activities of all resources companies, to seek assurance that there are rigorous processes and practices in place which can prevent an event like this happening again in the future," he said.

Rio Tinto chair Simon Thompson acknowledged fault on behalf of the miner for the destruction of the sacred site and promised change.

"What happened at Juukan was wrong and we are determined to ensure that the destruction of a heritage site of such exceptional archaeological and cultural significance never occurs again at a Rio Tinto operation," Thompson said.

"We are determined to regain the trust of the Puutu Kunti Kurrama and Pinikura people and other Traditional Owners.? We have listened to our stakeholders' concerns that the lack of individual accountability undermines the group's ability to rebuild that trust and to move forward to implement the changes identified in the board review."

Read more: Rio TintoHESTAJuukan GorgeACSIJean-Sebastien JacquesPinikuraPuutu Kunti KurramaRIAADebby BlakeyLouise DavidsonSimone NivenSimon OConnor
Link to something isRnwaoh