Stakeholders including investors and activists have welcomed a decision by Rio Tinto to put its climate reporting to an advisory vote at this year's AGMs.
Rio Tinto is the first Australian-listed company to commit to a vote on its Taskforce for Climate-related Financial Disclosure (TCFD) reporting, joining Glencore, Unilever, Aena and Moody's.
"We meet with the Climate Action 100+ (CA100+) group regularly at the Board, Executive Committee and climate team levels, and we value their co-ordination of investor engagement," Rio said in a statement. "We will work towards disclosures consistent with the evolving CA100+ benchmark and our Board intends to put our TCFD-aligned reporting to an advisory vote at our 2022 annual general meetings."
Investors need access to "reliable and sufficiently granular information" to inform their understanding of companies' exposure to physical and transitional risks, said the Australian Council of Superannuation Investors (ACSI).
"We welcome the announcement by Rio Tinto, and its recognition of the importance of climate-related financial risks to investors," said Louise Davidson, ACSI CEO. "Climate change risks are deeply embedded across our economy and a significant challenge for Australian companies and investors.
The Australasian Centre for Corporate Responsibility (ACCR) also welcomes Rio Tinto's "leadership and commitment" in putting the climate strategy to a vote and urges the company to commit to making the vote an annual exercise.
"There is currently no legal obligation for major polluters to disclose climate-related risks," said Dan Gocher, director of climate and environment. "Rio Tinto is Australia's third largest carbon emitter, responsible for more than 30 million tonnes CO 2 -equivalent annually. Rio Tinto's existing climate commitments are underwhelming to say the least, compared to its peers BHP and Fortescue Metals Group.
"We expect Rio Tinto to substantially increase its ambition before 2022."
ACCR has filed shareholder resolutions for 2021 to Santos and Woodside Petroleum, asking for an annual vote on the adoption of a Climate Report consistent with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the Climate Action 100+ Net-Zero Company Benchmark as developed by institutional investors.
"This commitment heaps further pressure on Santos and Woodside to support ACCR's resolutions, which will allow shareholders a vote on their climate plans," Gocher said. ""Currently, Santos and Woodside targets amount to business-as-usual, relying largely on buying cheap carbon offsets in the short term, and unproven technologies—like carbon, capture and storage (CCS)—in the long term. Yet shareholders have no formal mechanism to object to these plans."
Gocher called it "imperative" for Santos and Woodside to provide shareholders with sufficient disclosure to assess the future earnings and value of the two companies.
"The Say on Climate framework will provide shareholders with the opportunity to send a clear signal to the board about whether the company is effectively managing the risks of climate change," Gocher said.
In January, Rio announced an overhaul to its executive leadership in a bid to rebuild trust and social license to operate in the wake of the destruction at Juukan Gorge.
Shareholders and stakeholders noted the moves have to be grounded in a wider change to culture and governance through implementation.
Rio Tinto Chief Executive Jakob Stausholm has appointed a permanent chief executive of Rio Tinto's Iron Ore business, created a chief operating officer (COO) role, and added a chief executive Australia to the leadership team. Simon Trott, currently chief commercial officer, will become iron ore chief executive; copper and diamonds chief executive Arnaud Soirat will become group COO; and Kellie Parker, now managing director Pacific operations aluminium, will join the executive committee as chief executive Australia.