Investors raise water-related concerns as Rio Tinto strives for ESG excellence

In a context of growing awareness of the climate urgency, extractive industries are under scrutiny, and Rio Tinto, one of the leading global mining giants, is no exception.

This week's annual shareholders' meeting was a clear indicator of this trend. The company faced specific demands regarding its environmental performance, particularly concerning water and biodiversity.

The CEO of Rio Tinto, Jakob Stausholm, reiterated the company's commitment to excellence in ESG (Environmental, Social, and Governance) performance. Mining, which accounted for between 4% and 7% of global greenhouse gas emissions in 2020, plays a crucial role as a provider of essential raw materials for the energy transition, including electric vehicles and renewable energy infrastructure.

Rio Tinto not only acknowledges its role in the current climate crisis but also seeks to lead the change towards more sustainable mining practices. With the aim of reducing Scope 1 and 2 carbon emissions by 15% by 2025 and by 50% by the end of the decade, the company is actively pursuing cost-effective pathways to decarbonization. This includes investments of between 5 and 6 billion dollars in decarbonization projects for the period 2022-2030, a figure adjusted from a previous forecast of 7.5 billion dollars.

Chairman Dominic Barton emphasized the company's intention to maintain focus on four key objectives, including achieving impeccable ESG credentials. This statement reflects a clear awareness of the challenges facing the industry and the responsibility of companies to lead by example.

The global drive for materials such as copper, lithium, nickel, cobalt, and iron for the clean energy transition has led to a significant increase in the number of mining projects worldwide. However, this boom does not come without costs. Deforestation of tropical rainforests and the risk to species such as great apes are just some of the negative consequences that have come to light.

In Guinea, Rio Tinto's development of part of the Simandou project, one of the largest untapped iron deposits in the world, has raised particular concerns. It is estimated that more than 23,000 chimpanzees could be affected by mining activities in the area. This situation highlights the complexity of balancing the demands for resources for the energy transition with the preservation of biodiversity and vulnerable ecosystems.

Water management is emerging as a critical issue in Rio Tinto's mining operations. The release of water from its mineral sands operation in Madagascar, which resulted in fish deaths and concerns about heavy metal contamination, has been a point of contention. Although an independent report found no direct evidence of heavy metal contamination, the company acknowledges the importance of water for host communities and is committed to improving water management and transparency for stakeholders.

Rio Tinto's shareholder assembly has been a clear reminder of the environmental challenges facing mining companies today. As demand for critical minerals for the energy transition continues to grow, so does the need for mining practices that are sustainable and environmentally responsible. Rio Tinto, with its renewed commitment to sustainability and environmental management, seeks to be a leader in this transformation.