Governance And Sustainability For Rio Tinto Limited

Discussion

Discuss about the Governance and Sustainability for Rio Tinto Limited.

Rio Tinto Limited is an Australian organization, producing minerals and metals which are extremely important for human progress. Rio Tinto has extreme belief in contributing for sustainable development by production of materials that are vital for the world around in a socially responsible way. They share the profits of their business and reduces any kind of negative effect on people, the environment and the communities. Rio Tinto is committed towards operations of their business with complete respect and consideration towards the health and safety of their people, their communities, and the risks and responsibilities related with the regional and international environment. With the help of partnership agreements, Rio Tinto works with affected communities for sharing the wealth their operations generate and direct funds where they are required most. Participation in industry organizations happen for helping to drive change and set up sustainability benchmarks which represent the different societal expectations and challenges. Partnerships with non-governmental organizations are there for helping in better understanding and meeting the requirements of the stakeholders. Their approach towards sustainable development gets directed by their international code of conduct for business “The way we work” and get reinforced by their health, safety and environmental policies (Riotinto.com 2017).

The contribution to sustainable development at Rio Tinto allows them to run their operations, all the while upholding the appropriate associations with their many stakeholders. This contribution allows the organization in looking to the long term and even planning and running the future operations. It assists them in securing new deposits and then converting those into new mines and some other facilities, which drive value for their business and their stakeholders. At Rio Tinto, safety is of topmost priority and has been so for more than 140 years and their ambition is defined (Riotinto.com 2016). They are focused on creating an environment that is safe and where everyone is safe at home at all time. The safety culture within the organization is strong, with safety being the core value embedded in the minds of all employees and contractors across all the different operations and all the different areas. In this industry and specifically in Rio Tinto, partnerships are vital. With just one license for operating, they make sure they are having the appropriate relationship and the right amount of trust among themselves and in the communities, with employees, governments and suppliers. In their industry, they have found that climate change is one of the long-term challenges that they face and are preparing to respond to (Flitton 2016). They are also attempting to better their carbon footprint by means of a clear focus on energy sufficiency. They are even creating a series of carbon pricing situations for informing their decisions, which includes capital expenditure. At Rio Tinto, passionate and proud people are working for Rio Tinto, making the workforce capable and professional. With a strong culture, the value set is the same everywhere and safety is given the top priority. Not just the employees are proud of working for Rio Tinto, they are even proud of supplying the main metals and minerals necessary for the modern society. Rio Tinto puts absolute importance on diversity and inclusion for their future. The main aspects of diversity given importance are gender, nationality and millennials. Not just diversity, inclusion is what is important. It is to make sure they make the most of the wide group of people for finding solutions to difficult problems. What the organization is concerned about is developing people from the local communities in which they operate so that they can ensure a sustainable license of operating in those areas (Kruesman 2013).

Organizational background

At Rio Tinto, they are committed towards the operations of their business responsibly, in the context of health and safety of their people, their local communities and the associated risks and responsibilities with the local and global environment. On a local level, they take care of issues like water supply, while balancing the needs of their operations with the requirements of their local communities. Like other organizations, they also face larger, global issues like the evolution to low carbon energy systems and climate change (Rühmkorf 2015). The company has a separate Sustainability Committee that is focused on reviewing and advising regarding the efficiency of the company’ s practices, policies and programmes related to health, safety, security, environment, communities and sustainability. They possess oversight regarding the major sustainability issues and uncertainties, all the while ensuring they are being clear with their stakeholders regarding the areas they are responsible for as a Committee. The Committee takes care of extensive reviewing of major risks and exposures on a revolving basis. In 2016, their reviews were concentrated on underground safety, water and tailings management, and process safety. They also take care of the reviews related to water, energy, biodiversity and climate change. The committee meets at least four times every year and visits their different sites. Site visits are taken very seriously and when they are on visiting they take up a hands-on role in confirming the sustainability performance of the operations and even provides advice and motivation to the local teams. Many thousands of men and women are working hard at Rio Tinto every day for producing metals and minerals which are necessary for human development (Eaton 2016). The people make a constructive difference both at the international level and with local communities. Rio Tinto has a wide comprehension of the regular operational risks the workers face every day and their Sustainability Committee offers their support and help in managing of the mitigation of those risks. Moreover, they have an accountability of being an agent of constructive change, helping this industry in eliminating fatalities and displaying leadership on the benchmark levels they set.

The Sustainability Committee at Rio Tinto focuses on the following areas:

• Monitoring the commitment levels of the management towards the systems, behaviour and processes necessary for the standards and policies within their scope.
• Ensuring local and international sustainability associated risk gets properly understood and considered within the company’s risk profile.
• Annually reviewing sustainability targets and the metrics used for analyzing them.
• Reviewing the performance of Rio Tinto against those targets (Yakovleva 2017).

Rio Tinto Group is a dual listed company that is structured as a single economic entity formed from the combination of Rio Tinto PLC from London and Rio Tinto Limited from Australia. The interests of this Group are both geographically and product-wise diverse. Majority of the company’s resources are in North America and Australia. They have operations in Asia, Europe and Africa too (Riotinto.com 2017). Their business comprises of mills, open pits and underground mines, smelters and refineries, along with technology, exploration and service facilities.  Their products assist in helping the fulfillment of important customers requirements and improving the living standards of people. Their operations and closing of their operations are both done responsibly, safely and sustainably. Long term approaches are taken for their business. It implies the development of first class orebodies into long-term, large and effective operations and development and application of new technologies at their mines, smelters and refineries. Because of that, their operations have the capability of sustaining competitive advantage across business cycles. The Group pursues prospects for cost reductions, prudent growth and productivity improvements. Their business policies, principles and standards express their values of teamwork, respect, safety, excellence and integrity. These values reinforce the process in which they take care of the social, economic and environmental influences of their operations and how they are governing their business. The life cycle of the business stretches across the exploration, development, operation and closure of their assets, how the minerals and metal products are marketed, and the legacy that is left at the completion of an assets economic life. With the help of their risk management framework, every phase contains the sustainable development considerations (Roeder 2016).

In 2016, Rio Tinto spent US $166 million on community programmes. Their direct economic contribution all over the globe was US $35.1 billion. The company saw a 34% decrease in their overall injury frequency rate (per 200000 hours toiled) over the last 5 years. The year also saw a 25.9% reduction the emission intensity of their greenhouse gas since 2008. With Australia, the US and Madagascar, three new community agreements were signed by Rio Tinto Group. 2016 saw just one fatality at managed operations, with the AIFR remaining same as 2015 (Riotinto.com 2016).

Conclusion

This sustainability report of Rio Tinto is presenting a complete overview of the company’s contributions to global and local sustainable development. There is commentary and additional data regarding the performance of the Group in 2016. It has been found from the discussion of sustainability at Rio Tinto that they have extreme belief in contributing for sustainable development by production of materials that are vital for the world around in a socially responsible way. Rio Tinto is committed towards operations of their business with complete respect and consideration towards the health and safety of their people, their communities, and the risks and responsibilities related with the regional and international environment.

References and Bibliography

Eaton, C., 2016. Building social license to operate through community engagement: the WUSC-Rio Tinto Alcan partnership in Ghana. Field Actions Science Reports. The journal of field actions, (Special Issue 14).

Flitton, D. 2016. Rio Tinto’s billion-dollar mess: ‘unprincipled, shameful and evil’. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/world/billiondollar-mess-a-major-disaster-the-people-do-not-deserve-to-have-20160817-gquzli.html [Accessed 21 Sep. 2017].

Hilson, G., 2012. Corporate Social Responsibility in the extractive industries: Experiences from developing countries. Resources Policy, 37(2), pp.131-137.

Kruesman, M., 2013. Digging for compliments: Rio Tinto Group, corporate social responsibility and the diffusion of international norms. The London School of Economics and Political Science.

Owen, J.R. and Kemp, D., 2013. Social licence and mining: A critical perspective. Resources Policy, 38(1), pp.29-35.

Riotinto.com. 2016. Partnering for progress. [online] Available at: https://www.riotinto.com/documents/RT_SD2016.pdf [Accessed 21 Sep. 2017].

Riotinto.com. 2017. About us. [online] Available at: https://www.riotinto.com/about-us-108.aspx [Accessed 21 Sep. 2017].

Riotinto.com. 2017. Sustainable development. [online] Available at: https://www.riotinto.com/australia/pilbara/sustainable-development-9604.aspx [Accessed 21 Sep. 2017].

Roeder, R.W., 2016. Foreign Mining Investment Law. Springer Verlag.

Rühmkorf, A., 2015. Corporate social responsibility, private law and global supply chains. Edward Elgar Publishing.

Slack, K., 2012. Mission impossible?: Adopting a CSR-based business model for extractive industries in developing countries. Resources Policy, 37(2), pp.179-184.

Yakovleva, N., 2017. Corporate social responsibility in the mining industries. Routledge.