Traditional Owners, Far North Queensland

Industry Association Disclosure

Our view on the role of industry associations

We believe that industry associations have an important role to play in the sharing of best practice and the development of standards. Industry associations provide us with an industry leadership opportunity to better understand a range of external views and contribute our perspectives and experiences in support of good policy outcomes which benefit business, the economy and society.

We recognise there is increasing stakeholder interest in the nature of industry associations and the role they play in policy advocacy, particularly where they represent different positions on key issues to those of the member companies they represent.

Each industry association is different. They represent a mix of companies and organisations and often cover multiple policy, business and sustainability topics, including climate change and energy. Our participation across different industry association agendas will also vary, with active engagement in associations on issues where we believe 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. We believe that diverse and differing views should be heard and are an important step in finding compromise that allows progress to be made. 

Recognising that an industry association’s view will not always be the same as ours, we review the value of individual industry association memberships both prior to joining and when membership is due for renewal. We have published principles which govern our approach to participation in industry associations.

We are providing additional information on industry association memberships, listing the top five industry groups we engage with by membership fees and the industry groups we have engaged on climate policy issues. This includes detail on where industry association positions on climate change significantly differ from that of Rio Tinto's.

This information will be maintained as part of our public disclosure. It supplements information provided in our Climate Change Report and in our annual CDP (Carbon Disclosure Project) submissions on industry associations that take positions on climate change and energy.

Appendix 1 (available in the PDF) lists the major industry associations that are important to our policy advocacy approach and that take positions on climate change issues.

Industry association fees

Membership fees payable to industry associations are often based on either production volumes or revenue, and in some cases are subject to a cap. Generally, the annual subscription fee payable is an aggregate amount – that is no part of the annual fee is earmarked for any particular purpose or activity. On some occasions, we pay charges in addition to membership fees to industry associations, these are typically for one-off projects or exceptional undertakings.

Our top five industry association memberships by fees for the 2019 calendar year is detailed in table 1.

Table 1: Rio Tinto’s top five industry association memberships by fees for CY2019

Industry association

Jurisdiction

Purpose

Fee paid ($US)

1

Minerals Council of Australia (MCA)

Australia

The MCA represents Australia’s exploration, mining and minerals processing industry nationally and internationally including its contribution to sustainable development and society.

$2,095,000

2

International Council of Mining and Metals (ICMM)

International

ICMM is dedicated to a safe, fair and sustainable mining and metals industry. They serve as a catalyst for change, enhancing mining's contribution to society.

$1,239,000

3

Diamonds Producers Association (DPA)

International

The DPA protects and promotes the integrity and reputation of diamonds, thereby ensuring the sustainability of the diamond industry.

$1,200,000

4

International Copper Association (ICA)

International

The ICA develops and defends copper markets and make a positive contribution to society’s sustainable development goals.

$916,000

5

Aluminium Association of Canada (AAC)

Canada

The AAC represents the Canadian primary aluminium industry, and strives to ensure that the Canadian primary aluminium industry is considered a world-class model of sustainable prosperity.

$754,000

Our position on climate and energy policies

As pioneers in metals and mining, we produce materials essential to human progress. The metals and minerals we provide are vital for all stages of economic growth in both emerging and developed economies. We recognise the assessment of climate change science and believe that sustainable development requires both continued economic growth and an effective response to climate change. As a result, continuing to drive economic growth, while also responding to climate change, is a strategic issue for us. We aim to be part of the solution by supplying the materials essential to building a low-carbon economy; reducing our greenhouse gas (GHG) emissions; testing and building the resilience of our portfolio; and advocating for policies that advance climate goals.

On the complex issue of climate change, we believe that significant progress towards a solution will only occur where there is broad engagement involving the breadth of experience and opinion from business, governments, investors, civil society organisations and consumers.

We advocate for policy that is consistent with our public climate change position and the principles contained within it. Table 2 summarises these issues. The analysis of industry associations has been undertaken against these principles.

Table 2: Key climate change and energy issues

Issue

Rio Tinto’s position

1

Climate science

Acceptance of mainstream climate science and the fact that climate change is occurring and is largely caused by human activities

2

Paris Agreement

We support the outcomes of the Paris Agreement and the long term goal to limit global average temperature rise to well below 2ºC

3

The role of business

Business has a role to play in addressing and managing the risks and uncertainties of climate change

4

Emission reduction and energy targets

It is important to set targets, take action to achieve them, and report on progress against targets

5

Adapting to climate change

We recognise the importance of adapting to climate change by increasing resilience to a changing climate

6

Market mechanisms for least cost abatement

We support the use of market mechanisms, including a market-based price on carbon

7

Competitiveness

Competitiveness issues and the need to minimise competitive distortion within and across jurisdictions is important, especially for emissions intensive trade exposed (EITE) industries

8

Energy Policy

Rio Tinto will promote alignment with its climate and energy policy in its discussions with industry association members

A statement to our industry associations

Climate change presents a significant challenge for the world, and for Rio Tinto.

We produce materials essential to human progress. We aim to do this in a sustainable way and be part of the solution to help address the climate change challenge.

For this reason, we have set the ambition to reach net zero emissions by 2050.

We have an important role to play in advancing climate action, but we cannot do this alone.

We believe that significant progress towards a solution will only occur where there is broad engagement involving the breadth of experience and opinion from business, governments, investors, civil society organisations and consumers. Government policy that creates the right framework for change is critical, coupled with real business action and societal shifts. We believe collaboration across countries, industries and society is key to achieving the systemic change needed to meet climate challenges.

We actively engage on climate change policy with governments, industry associations, investors and civil society in the countries where we operate.

We advocate for policies that advance the goal of the Paris Agreement on Climate Change to keep a global temperature rise well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.

We are guided by our overall policy position that supports market mechanisms including carbon pricing, as we believe this is the best way of stimulating innovation and achieving emissions reductions at least cost. We see global industry associations as important partners including in advocacy on key policy issues and do not support advocacy for policies that undermine the Paris Agreement or discount Nationally Determined Commitments (NDCs). We expect industry associations to advocate in a manner that accepts mainstream climate-science. We encourage our industry associations to challenge themselves to raise their climate ambition and consider how they can advocate for the emissions cuts required to meet the commitments in the Paris Agreement.

We expect our industry associations to align with us on this journey to achieve the ambitions set in the Paris Agreement.

Significant differences in policy positions

US National Mining Association

The National Mining Association (NMA) advocates for national and international mining interests in the United States. Although there are many areas of agreement, on issues such as mining law reform, safety and public land management, there is a significant departure on climate policy positions between the NMA and Rio Tinto as set out in table 3. A Rio Tinto general manager sits as a Board member and communicates Rio Tinto’s position on a need to address climate risk and urges NMA to change its position.

Table 3: National Mining Association policy differences

Issue

Association position

Rio Tinto’s position

Paris Agreement

The NMA has not supported the Paris Agreement on the grounds that it believes that it would have had damaging effects on the US economy.

Rio Tinto supports the outcomes of the Paris Agreement and the long-term goal to limit global average temperature rise to well below 2C. We recognise that achieving this goal will require individual jurisdictions to take actions in line with their Nationally Determined Contributions, and raise ambition over time.

Market mechanisms for least cost abatement

The NMA did not support the Clean Air Act (2008) and campaigned to remove the Clean Power Plan (CPP). NMA believes the CPP would not have had a meaningful impact on climate change and would have result in increased electricity costs in the US. It sees government’s role as supporting the development of low emissions technology, rather than implementing regulation that would put a price on carbon, due to its damaging effects on the US economy.

Rio Tinto supports market mechanisms as the best way of achieving emissions reductions at least cost, and supports a market-based price on carbon.

Note that our previous report detailed how the US Chamber of Commerce (USCC) had significant policy differences to us. In 2019 we communicated and engaged the Chamber on its climate change position along with other companies, and in the past year they have adjusted their position. The USCC now supports US participation in the Paris Agreement, acknowledges that humans contribute to climate change, and calls for action to address the challenge.

Advocacy alignment

In April 2019 we issued stronger guidance for our industry associations regarding our expectations in relation to climate change and energy policy advocacy. Our Industry Associations and Climate Change statement outlines that where our membership is significant, we will work in partnership with those industry associations to ensure that their advocacy is consistent with our own public position and the Paris Agreement. Furthermore, that we will consider our support and membership where they do not partner with us in seeking to advance the policy agenda consistent with the outlined principles, once we have engaged in a formal dialogue process with them.

In reviewing 2019 activities, we have become aware that some of our industry association and climate change principles leave room for interpretation and therefore require clarification, which we will action in due course.

While there is alignment of stated policy positions in accordance with our April 2019 guidance, we have also become aware of several instances of concern regarding misalignment of the advocacy of the Minerals Council of Australia (MCA) (as distinct from stated policy). This includes instances of public commentary and advocacy on thermal coal and decarbonisation that is not technology neutral and is inconsistent with the goals of the Paris Agreement. We do not consider this a material breach and have sought continuing improvement from the MCA to align advocacy with stated policy positions. We have engaged with the MCA to highlight instances of misalignment.

In assessing advocacy, we also found there were statements by the MCA that had not been endorsed through board or member-wide governance. This includes defence of future demand for thermal coal and advocacy that was inconsistent with goals of the Paris Agreement. To mitigate the chance of future misalignment, the MCA will establish appropriate advocacy governance with a set process for future advocacy to ensure alignment with board views and formal MCA policy statements.

During 2019, the MCA has responded with actions including the separation of Coal21 governance (which was sought by several members). We will continue to monitor, review and engage with the MCA on these matters.

Climate change initiatives with industry associations

We are actively involved in climate change and energy policy engagement across the jurisdictions in which we operate, and which are important to us. Part of this involves partnerships with industry associations, and some examples relating to this are set out below.

Energy Transition Commission

In early 2019, we joined the Energy Transitions Commission (ETC); a group of leaders from public, private and social sectors with the goal of accelerating change towards low-carbon energy systems. Simon Thompson, our Chairman, is a Commissioner. The ETC is tackling the challenge of how we reduce emissions from the “hard-to abate” industrial and transport sectors of the economy, including steel – the customer for our iron ore and the source of most of our scope 3 emissions.

Cleaner, Safer Vehicles Initiative at ICMM

ICMM’s Low Carbon Vehicles Initiative aims to promote operational and technological innovation to reduce emissions from mobile mining equipment and increase energy-efficiency with the ambition of achieving greenhouse gas-free surface mining vehicles by 2040. In 2019, we participated in workshops between ICMM members and vehicle manufacturers to make progress towards these goals.

International Emissions Trading Association (IETA)

We work with IETA to empower business to engage in climate action, advancing the objectives of the United Nations Framework Convention on Climate Change and the Paris Agreement as informed by IPCC science. We are also working together to establish effective market-based trading systems for greenhouse gas (GHG) emissions and removals that are environmentally robust, fair, open, efficient, accountable and consistent across national boundaries. A Rio Tinto representative is currently chairman of the board of IETA, as well as co-chair of the international working group.