Rio Tinto slammed for denying shareholder vote on coal lobbying transparency at today’s London AGM

Lawyers warn of legal implications on governance.

Rio Tinto’s “unequal treatment” of shareholders has been slammed by environmental legal experts, as investors in its UK-listed entity, Rio Tinto plc are denied a vote on the mining giant’s disclosures around coal lobbying at today’s (April 11) annual general meeting in London.
The Anglo-Australian dual listed company has restricted voting on the resolution – co-filed in March by Swedish pension fund AP7, the Church of England Pensions Board, and Australian superannuation fund Local Government Super– to shareholders in its Australia-listed firm, Rio Tinto Limited.
The resolution, which has been rejected by Rio Tinto’s board as “not in the best interests of shareholders”, calls on the firm to review and fully disclose its relationships, and their associated costs, with industry bodies such as the Minerals Council of Australia (MCA) whose position on climate change is at odds with its own professed stance. The board has also recommended a vote against a supplementary resolution seeking to change the company’s constitution to allow advisory resolutions to be put forward – a formality necessitated by the absence of a non-binding shareholder resolution framework in Australia. Link to RI coverage
But, in a joint report, titled: ‘Still Digging: Recommended Investor Response to 2018 Shareholder Resolutions on Rio Tinto’s Climate Lobbying’, environmental law firm, ClientEarth in partnership with non-profits, ShareAction and InfluenceMap, criticise Rio Tinto’s refusal to let shareholders in its UK-listed entity vote, warning: “Treating shareholders across a dual listed company differently raises serious issues of best practice corporate governance, and may also raise legal issues”.
They add that such an approach undermines the company’s claim to manage both entities as a single economic unit with a “common approach to corporate governance”. They are urging Rio Tinto plc shareholders to respond by voting against the company’s accounts and raising the issue of their exclusion from the resolutions at the London meeting.The report also urges shareholders in the Australian listed entity to disregard board opposition and back the investor led resolutions at Rio Tinto Limited’s meeting on 2 May 2018 in Melbourne. The report warns Rio Tinto of legal ramifications it says could arise through its association with trade bodies misaligned with its stance on climate change, stating: “Where corporate disclosures are contradicted or undermined by the activities of industry associations, there is a risk of the disclosure being queried and allegations of misleading conduct may arise”.
Rio Tinto claims that its position on climate change is clear and points to its support for the 2016 climate disclosure ‘Aiming for A’ resolution and its public statements on the issue recognising the science of climate change and supporting the goal to limit global temperature rise below two degrees Celsius.
However, the ClientEarth report cites the “wave” of recent litigation against fossil fuel producers in the US by local governments, many of which, “rely heavily on allegations of fraud and ‘misinformation’ campaigns regarding the state of climate science by certain defendants and their industry association agents”.
The report says Rio Tinto retains membership of 22 trade associations that have been identified as “engaging with climate and energy policy without significant disclosure of these memberships or attempts to address material inconsistences”.
Sophie Marjanac, ClientEarth climate lawyer, said: “You cannot say you are actively working to tackle climate change while pouring money into pressure groups that exist to keep the road open for high-carbon energy projects. It is disingenuous and a threat to the value of investors’ shares”,
Rio Tinto’s response to the filing of the resolution contrasts with that of that of fellow Anglo-Australian mining goliath, BHP Billiton, which faced a similar resolution in 2017. Rio Tinto’s rival responded to the scrutiny by conducting a review into “material differences” in its “climate and energy policy” with that of the 21 industry associations it was a member of. BHP Billiton has just announced (5 April 2018) its decision to formally withdraw its membership from the World Coal Association because of the review.