We have put the low-carbon transition at the heart of our business strategy: combining investments in commodities that enable the energy transition with actions to decarbonise our operations and value chains.
Our strategy and approach to climate change are supported by strong governance, and we are building our processes and capabilities to enable us to reach net zero emissions by 2050.
Climate change has formed part of our strategic thinking and investment decisions for over two decades and was a fundamental component in our strategy development process in 2021. Recently, there has been a rapid shift in the external context on tackling climate change. This includes the increasingly ambitious emissions targets set by many governments in the lead up to COP26; developments in low-carbon technologies, such as renewables and electric vehicles, and their falling costs; as well as the increasing international co-ordination on climate policies, including carbon pricing.
In parallel, society’s expectations continue to rise. Companies extracting minerals must reduce their impact on the environment and host communities and go beyond regulatory obligations to drive the development of more sustainable value chains. An emerging theme in tackling these issues is the circular economy, which is built around avoiding and reducing waste and pollution, keeping products and materials in use, and regenerating natural systems. The highly recyclable nature of our products, potential utilisation of waste streams, and re-use of assets could create considerable near and long-term growth and partnership opportunities as the world tackles climate change.
Disclosures consistent with the TCFD recommendations
Climate-related disclosures on governance, strategy, risk management, as well as metrics and targets, are integrated into this Annual Report in the following sections: Strategic Context, Key Performance Indicators, Innovation, Risk Management, Principal risks and Uncertainties, Governance, the Sustainability Committee report, the Remuneration Committee report and in the notes to the accounts.
Our position on climate change
In 2015, we supported the adoption of the Paris Agreement and the long-term goal to limit global average temperature rise to well below 2°C and to pursue efforts to limit warming to 1.5°C. The Paris Agreement highlights the need to take “into account the imperatives of a just transition of the workforce and the creation of decent work”. We are committed to supporting a just transition to a low-carbon economy that is socially inclusive and provides decent work and livelihoods. We will integrate our commitment to implementing core business and human rights standards, including the UN Guiding Principles on Business and Human Rights (UNGPs), into our decarbonisation plans and actions.
Government policy that creates the right framework for change is critical, coupled with real business action and societal shifts. A challenge as serious as climate change requires transparency, collaboration and a shared contribution to the solution. Our positions on key climate and energy policy issues are:
We accept mainstream climate science assessed by the Intergovernmental Panel on Climate Change and the fact that climate change is occurring and is largely caused by human activities. We acknowledge the IPCC’s report on 1.5°C and their recommendation to aim for net zero emissions by 2050.
We support the outcomes of the Paris Agreement and the long-term goal to limit global average temperature rise to well below 2°C and pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels. We support governments as they raise the ambition of their Nationally Determined Contributions (NDCs).
The role of business
Significant progress towards a solution to climate change will only occur where there is broad engagement involving the breadth of experience and opinion from business, governments, investors, civil society organisations and consumers. Business has a role to play in addressing and managing the risks and uncertainties of climate change.
Emissions & energy reduction targets & standards
It is important to set targets, take action to achieve them, and report on progress against targets. We do not advocate for policies that undermine the Paris Agreement or discount NDCs. Our ambition is to reach net zero emissions across our operations by 2050.
Adapting to climate change
We recognise the importance of adaptation and increasing resilience to a changing climate.
Market mechanisms & emissions trading
Where climate policies are implemented, we support the use of market mechanisms, including a market-based price on carbon such as in emissions trading systems. We believe this is the best way of stimulating innovation and achieving emissions reductions at least cost.
Effective climate policies should incentivise the private sector to invest in low-carbon technology, while avoiding the negative unintended consequences of transferring industrial production to countries with weaker emissions regulation. Where climate regulation, such as carbon pricing, is introduced to incentivise the decarbonisation of ‘hard to abate’ sectors, this should be coupled with measures to maintain the competitiveness of emissions intensive trade-exposed industries to minimise competitive distortions within and across jurisdictions.
Energy policy & energy efficiency
Rio Tinto will promote alignment with its climate and energy policy in its discussions with industry association members. We recognise the valuable contribution that renewable energy sources make in reducing emissions. Many of our operations are energy intensive and we have been taking action to improve both productivity and energy efficiency, as we reduce emissions.
Climate and energy policy advocacy
Significant global and regional progress on climate change will only happen when everyone – business, governments, investors, civil society organisations and consumers – plays their part. Our own approach to climate change requires active engagement on relevant policies with a range of stakeholders in the countries where we operate.
Our responses to government consultations are guided by our overall policy positions that include support for market mechanisms, as we believe this is the best way of stimulating innovation and achieving emissions reductions at least cost. Our submissions are typically developed by subject matter experts, reviewed by government relations and legal teams, and then approved by the relevant country director or senior executive.
We have responded directly to four national and sub-national government consultations on climate and energy policy:
Federal Government of Australia – Department of Climate Change, Energy and the Environment and Water, September 2022Consultation Paper: The Federal Government sought feedback on the Safeguard Mechanism Reform consultation paper (released August 2022) outlining how reform of the existing Safeguard Mechanism will play an important role in reducing Australia’s greenhouse gas emissions by 43% below 2005 levels by 2030 and meeting Australia’s commitment to reach net zero by 2050.
Working with our industry associations
Our annual review of our industry association memberships supplements the Climate Change Report and provides a complete list of the major industry associations that take positions on climate change and sets out the elements used to evaluate their policy positions and advocacy:
- Accept mainstream climate science
- Advance the Paris Agreement goals to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels
- Support governments as they raise the ambition of their Nationally Determined Contributions
- Support market mechanisms, including carbon pricing, that stimulate innovation and cost-effective emissions reductions and minimise competitive distortions within and across sectors and jurisdictions
- Recognise the valuable contribution that renewable energy sources make in reducing emissions, not undermine the role renewables have in the energy mix
- Ensure that any positions and advocacy on the use of coal do not support subsidies and note that it will require advanced technology, and in the medium to long term must be consistent with Paris targets
The review provides further information on any major industry associations whose positions and advocacy on climate and energy policy significantly differ from Rio Tinto’s key positions on these issues.