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.
We support the International Council on Mining and Metals Climate Change Statement
As stewards of the minerals and metals that are critical to decarbonisation and sustainable development, we embrace our responsibility to minimise the impact of our operations on the environment.”
Our Chief Executive Jakob Stausholm has joined with other CEOs on the International Council on Mining and Metals in signing a Climate Change Statement that commits us to a goal of net zero by 2050 or sooner.
We have made this collective commitment because we believe many of the sustainability challenges facing our industry, and the planet, require collective action to solve.
Last year, we announced our ambition to reach net zero by 2050. Our support for the statement confirms this ambition as a clear commitment.
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. 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. To achieve our decarbonisation goals and to support global goals, we need policy that promotes the production and consumption of low-carbon metals and minerals.
Summary of our positions on climate change policy
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Climate science and the Paris Agreement
We agree with the mainstream climate science published by the Intergovernmental Panel on Climate Change. We support the Glasgow Climate Pact, in which governments resolved to pursue efforts to limit the global temperature increase to 1.5°C that “requires rapid, deep and sustained reductions in global greenhouse gas emissions, including reducing global carbon dioxide emissions by 45% by 2030 relative to the 2010 level and to net zero around mid-century, as well as deep reductions in other greenhouse gases”. Consequently, we do not advocate for policies that undermine the Paris Agreement or discount Nationally Determined Contributions (NDCs).
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The role of business
Business has a vital role in addressing and managing the risks and uncertainties of climate change and driving emissions to net zero. A range of policy measures is necessary to support the early movers in our sector that innovate and deploy low-carbon technology. Our policy principles provide a common architecture for the positions we take in different jurisdictions – policy should be effective, fair, pragmatic, market-based and support free trade.
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Putting a price on carbon
A market-based price on carbon is the most effective way to incentivise the private sector to make low-carbon investments and drive down emissions. Based on our current assumptions, carbon prices below $100/tCO2e may be enough for us to decarbonise power and support our investment in renewable generation and firming infrastructure. Higher carbon prices and other forms of support are necessary to address harder-to-abate parts of our carbon footprint, such as process heat and carbon anodes, and remain commercially competitive in a global market.
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Competitiveness
Minerals and metals are globally traded, so effective climate policy should incentivise the private sector to invest in low-carbon technology without undermining the competitiveness of trade-exposed industries and shifting production, jobs and supply chains to countries with lower emissions standards (carbon leakage). If there is significant regional variation in carbon prices, carbon border adjustment mechanisms (CBAM), or alternative policies, are necessary to limit leakage, provided they are pragmatic, effective and equitable.
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Other policy tools
Carbon pricing, on its own, might not be sufficient to transform the metals sector. Other policy tools are necessary to tackle emissions and simultaneously achieve objectives related to industrial policy. These can include:
- grant funding, tax incentives and investment incentives to support research and development, innovation and first-of-a-kind projects
- product standards and procurement obligations (such as minimum and rising requirements for low or zero carbon metal) that drive deployment of pre-commercial technology
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.
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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.
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Safeguard reform submission
Rio Tinto submission to the Australian Government’s Department of Climate Change, Energy, the Environment and Water on Safeguard Mechanism Reform consultation paper – January 2023
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Climate-related Financial DisclosuresRio Tinto submission to the Treasury on the Climate-related financial disclosure consultation paper – December 2022
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Guarantee of Origin & Renewable Electricity Certification
Rio Tinto submissions to the Department of Climate Change, Energy, the Environment and Water on Australia’s Guarantee of Origin Scheme and Renewable Electricity Certification consultation papers – February 2023
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.
