Pension funds back attack on Rio Tinto

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The Independent Online

Pension funds with more than £28bn of assets under management are backing moves to force the mining company Rio Tinto to overhaul its corporate governance structure and approach to human rights.

The investment groups intend to support two union-backed resolutions to be put to Rio Tinto's annual shareholders' meeting next Wednesday in London. The resolutions call for the appointment of a single independent non-executive deputy chairman and for Rio Tinto to adopt the International Labour Organisation's conventions on human rights at work. The pressure on Rio Tinto to alter its stance on human rights follows an unprecedented international campaign involving trade unions in the UK, US and Australia.

The institutions backing the resolutions are the Co-operative Insurance Society, which is one of Rio Tinto's largest shareholders and has £23bn under management, and two local authority funds, the West Yorkshire Pension Fund and the South Yorkshire Pension Authority.

Support has also come from the Local Authority Pension Fund Forum and the leading corporate governance advisory service, Pension Investment Research Consultants.

John Monks, general secretary of the TUC, said: "We are asking fund managers and trustees to speak out on the risks of investing in companies like Rio Tinto, which do not have good standards of corporate governance or credible workplace codes of practice."

A TUC dossier says Rio Tinto has a "substantial record of employment and environmental abuses". Examples highlighted include an accident at the Lassing talc mine in Austria in 1998 in which 10 mineworkers were killed, and UK legal action over claims that workers at the Rossing uranium plant in Namibia contracted cancer. The Transport and General Workers' Union is also suing Rio Tinto on behalf of former workers at the Capper Pass tin smelter in Hull who contracted cancer.

At present Rio Tinto has two non-executive deputy chairmen - Dick Giordano, the chairman of BG, and Leon Davis, who retired in March as chief executive.

Rio Tinto is urging shareholders to vote against both resolutions. A spokesman said: "The structure of our board complies fully with UK codes of corporate governance and our code of business practice, The Way We Work, goes a lot further than those of other companies in areas such as non-discrimination, the right to be collectively represented."

He added that although ILO conventions technically applied to governments and not companies, nothing that Rio Tinto did was in breach of the conventions.