The fallout from the Juukan Gorge scandal has put executives at other mining companies on alert.
Jakob Stausholm took over as CEO of Rio Tinto in January following the ouster of three top executives, including former chief executive Jean-Sébastien Jacques, as the Anglo-Australian mining giant sought to draw a line under the outrage prompted by its decision to blow up ancient and sacred aboriginal rock shelters.
Stausholm joined Rio Tinto in 2018 as executive director and CFO from Maersk, where he was group CFO as well as strategy and transformation officer. Now he is tasked with improving Rio’s reputation in the face of increased investor attention over its environmental, social and governance (ESG) policies and behavior.
Presenting Rio’s full-year results last month, Stausholm announced that the company would put its climate action strategies to shareholders for a vote and, for the first time, set out Scope 3 emissions-reduction goals, committing its customers to reduce emissions and decarbonize the production of certain metals. Earlier, in 2019, Rio struck a deal with its biggest Chinese iron ore customer, China Baowu Steel, to help develop ways to reduce carbon emissions pumped into the atmosphere as part of the steelmaking process.
Storebrand, the $90 billion-plus Nordic hedge fund, recently moved to divest from ExxonMobil, Chevron and Rio Tinto; while the UK government-backed National Employment Savings Trust (NEST)—the UK’s biggest pension fund—announced it will begin divesting from fossil fuels, banning investments in any company involved in coal mining, oil extraction from tar sands or Arctic drilling.
To help repair its reputation in Australia and ensure that the kind of scandal that resulted from the blasting of the 46,000-year-old rock shelters at Juukan Gorge, doesn’t happen again, Rio recently entered into a three-year software-as-a-service contract with K2fly. Under the deal, Rio will use K2fly’s Infoscope platform to manage heritage information on Rio Tinto Iron Ore’s operations in the Pilbara region of Western Australia.
The fallout from the Juukan Gorge scandal has put executives at other mining companies on alert. Rio Tinto reported a 20% rise in underlying profit last year to US$12.4 billion and a record $9 billion dividend payout to investors. This was not enough to save former CEO Jacques, however, and highlights the importance of ESG over profit.