Rio Tinto: An Unusual Decision
September 13th 2020
A thought-provoking piece of news occurred last week when the giant Rio Tinto (Anglo-Australian multinational and the world's second largest metals and mining corporation, producing iron ore, copper, diamonds, gold and uranium) announced that they will cut the £4m bonuses of its chief executive and other senior leaders, following an internal review of the miner’s destruction this year of a 46,000-year-old Aboriginal site.
The group said that CEO Jean-Sébastien Jacques and two senior colleagues bore “partial responsibility” for company failings that led to it blowing up the Juukan Gorge caves. “It is clear that no single individual or error was responsible for the destruction of the Juukan rock shelters, but there were numerous missed opportunities over almost a decade and the company failed to uphold one of Rio Tinto’s core values — respect for local communities and for their heritage,” said Simon Thompson, Rio chairman. The company said it would act to strengthen its board oversight, governance and heritage protection functions following the incident.
This is an unusual decision in the corporate world and despite all the scepticism (“are they not just saving costs?”), criticism (“does the company feel that £4m is the right price for the destruction of cultural heritage?”) and hypocrisy (“mining company!”) that can be associated with this decision, it is one that I applaud. The case is relevant not only because of its environmental impact but also because of the social dimension involved (the aboriginal challenge), it sends the right messages to its stakeholders, raises the company’s public level of commitment and puts the right pressure on competitors and similar industries. Rio’s decision to publish these findings, however, may not satisfy investors, who have called for accountability over the destruction of the caves in Western Australia to access a A$135m (US$96.8m) iron ore deposit. The Responsible Investment Association Australasia, which represents members with A$9tn funds under management, said the measures announced did not go far enough.
Is this leadership with purpose or greenwashing? You decide, it can go both ways, but the merit is undeniable and, at the very minimum, triggers an uncomfortable discussion the corporate world needs to have when this sort of incidents happen. Have a great and Impactful week! Nuno Moreira da Cruz Executive Director Center for Responsible Business & Leadership