Engagement

Rio had significantly upped the ambition of its targets in the last year, including a new 2030 target and $7.5bn in green capex commitments. The previous interim target, for a 15% reduction in scope 1 and 2 by 2030, was brought forward to 2025, while a new 50% reduction target was introduced for 2030.

These new targets not only represented significant ambition for the business by the end of this decade, but with the 2025 target Rio had also committed to meaningful reductions in the short term. We note that Rio’s 50% target is ahead of most peers with a more conservative baseline, while the new 2025 target puts them ahead in short-term target setting. And unlike its peers, Rio has provided a clear breakdown of the abatement methods needed to reach the 2030 target. Rio’s attribution in their latest disclosure is to be applauded and allows us to scrutinise elements of their decarbonisation goals.

We have conveyed to management that we would like to see further progress on a target for Scope 3 emissions as they represent 95% of RIO’s total emissions.

Rio has committed to undertake a number of initiatives to influence scope 3 reductions by stepping up engagement with iron ore and bauxite customers who represent 50% of total Scope 3 emissions.

Finally, Rio has put in place some strong commitments for green CAPEX, but we believe there is scope for improvement on linking incentives to decarbonisation goals and Paris-aligned lobbying, as currently only 5% of short-term incentives are linked to decarbonisation goals, with no long-term incentives aligned. We believe long-term incentives are more appropriate for incentivising long-term performance against climate goals.