1.1Mt CO2e (3%)
Emissions Reduced Relative to our 2018 Baseline
Committed of the $1B Announced for Climate-Related Projects
Electricity Used at our Managed Operations from Renewable Sources
Scope 3 Goals
To Work with Partners to Reduce Emissions Across our Value Chains
In a world dealing with the COVID-19 pandemic, societal expectations on climate action remain high. Addressing them will, today more than ever, require businesses, governments and society to work together.
Having divested the last of our coal businesses in 2018, we no longer extract fossil fuels. Our portfolio is well positioned for the transition to a low-carbon economy. And in 2020 we pledged to address our own emissions, and those of our value chain. Our ambition: to reach net zero emissions across our operations by 2050.
For 2021, we also articulated a more explicit link between executive remuneration and our climate change goals and targets. Our targets – to reduce our absolute emissions by 15% by 2030 and emissions intensity by 30% relative to our 2018 equity baseline – are consistent with a 45% reduction in absolute emissions, relative to 2010 levels, and align with the Intergovernmental Panel on Climate Change (IPCC) pathways to 1.5°C. They are supported by our commitment to spend $1 billion on climate-related projects from 2020-24.
We operate in value chains with large carbon footprints. So we are actively engaging in partnerships to explore ways to improve environmental performance across our value chains, such as with China Baowu Steel Group, Tsinghua University and Nippon Steel Corporation in the steel sector, and the ELYSIS joint venture developing carbon-free smelting technology for aluminium. In 2021 we set a series of measurable and impactful Scope 3 emissions reduction goals to guide our partnership approach. We are also active participants in the International Council on Mining and Metals and the Climate-Smart Mining initiative.
Our Climate Change Strategy
Our climate change strategy is aligned with the goals of the Paris Agreement; climate change considerations are integrated with our strategic and operational decision making and our approach is supported by strong governance and continual strengthening of our processes and capabilities. Our third climate change report is available on our Sustainability reporting page and details progress against the four pillars of our approach:
Produce materials essential for a low-carbon future
We supply the metals and minerals essential to human progress. Each of the commodities we produce has a role to play in the transition to a low-carbon economy. Our most recent scenario analysis indicates that our portfolio is expected to perform more strongly in scenarios with proactive climate action, including in a scenario aligned with the goals of the Paris Agreement.
Reduce the carbon footprint of our operations
Our ambition is to reach net zero emissions by 2050. Our 2030 targets are to reduce our emissions intensity by 30% and our absolute emissions by 15%. Most of our assets already sit in the low end of their respective commodity carbon intensity curves and our 2030 targets are aligned with a 45% reduction in absolute emissions from 2010 levels, which is consistent with 1.5°C pathways as described by the Intergovernmental Panel on Climate Change.
Partner to reduce the carbon footprint across our value chains
Climate change will only be solved through collective action by governments, business and consumers around the globe. We are working on innovative partnerships to stimulate action with customers and other partners across the value chain. In 2020, we defined a series of measurable and impactful Scope 3 emissions reduction goals to guide our partnership approach.
Enhance our resilience to physical climate risks
We consider climate risks over the life of our operations, from the development of new projects through to closure and beyond. We have already experienced extreme weather events at many of our sites and are using scenarios to assess further medium- to long-term risks.
Disclosures Consistent with the TCFD Recommendations
In 2018, we referenced the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD) in our first climate change report and have aligned our climate change disclosures to be more transparent. Climate-related disclosures on governance, strategy, risk management and metrics and targets are also integrated into our Annual Report in the following sections: strategic context, key performance indicators, risk management, principal risks and uncertainties, governance, Sustainability Committee report and remuneration.
Our Climate Change Report provides a more thorough and consolidated review of our climate change strategy, our approach to evaluating and managing climate-related risks and progress towards our targets. Our 2020 Sustainability Fact Book, published with our Annual Report, includes a full list of the TCFD recommendations alongside references to our disclosure against them. We see ongoing development of good practice on climate-related disclosures in our sector and beyond, in part as a result of an iterative process of feedback from stakeholders.
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. 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.
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. 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.
In 2020, we responded directly to four national and sub-national government consultations on climate and energy policy:
Working with Our Industry Associations
Industry associations play an important role in policy development, sharing best practice and developing standards. They also allow us to better understand a range of external views and contribute our perspectives and experiences in support of a coordinated approach which benefits business, the economy and society.
We recognise that there is increasing stakeholder interest in industry associations and the role they play in policy advocacy. Each industry association is different. Some focus on a thematic mandate and promote best practice in a given domain, others gather a broader set of companies and represent a sector’s interest to government, policy makers and other stakeholders. Our participation across different industry associations also varies – we are more active in associations on issues where we can benefit, influence and add value.
Positions taken by industry associations on a given topic will consider a range of members’ views, and the nuance and emphasis of an industry association’s position may differ from that of Rio Tinto. Diverse and differing views should be heard in order to support rich and full debate, reach compromises where appropriate, and make progress on solutions to complex issues. We encourage industry associations to engage broadly with other stakeholders (such as investors and non-government organisations).
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.