sustainable development workshop - rio tinto€¦ · sustainable development workshop joanne...

Sustainable Development workshop

Joanne Farrell, Matthew Bateson, Laurel Green and Helen Newell

Sustainable Development workshop London 2016 21 October 2016

Rio Tinto Kennecott inland sea shorebird reserve

©2016, Rio Tinto, All Rights Reserved

Cautionary statement

This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”). By accessing/attending this presentation you

acknowledge that you have read and understood the following statement. In this presentation all figures are US dollars unless stated otherwise.

Forward-looking statements

This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Rio

Tinto Group. These statements are forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, and Section

21E of the US Securities Exchange Act of 1934. The words “intend”, “aim”, “project”, “anticipate”, “estimate”, “plan”, “believes”, “expects”, “may”,

“should”, “will”, “target”, “set to” or similar expressions, commonly identify such forward-looking statements.

Examples of forward-looking statements include those regarding estimated ore reserves, anticipated production or construction dates, costs,

outputs and productive lives of assets or similar factors. Forward-looking statements involve known and unknown risks, uncertainties,

assumptions and other factors set forth in this presentation.

For example, future ore reserves will be based in part on market prices that may vary significantly from current levels. These may materially affect

the timing and feasibility of particular developments. Other factors include the ability to produce and transport products profitably, demand for our

products, changes to the assumptions regarding the recoverable value of our tangible and intangible assets, the effect of foreign currency

exchange rates on market prices and operating costs, and activities by governmental authorities, such as changes in taxation or regulation, and

political uncertainty.

In light of these risks, uncertainties and assumptions, actual results could be materially different from projected future results expressed or implied

by these forward-looking statements which speak only as to the date of this presentation. Except as required by applicable regulations or by law,

the Rio Tinto Group does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new

information or future events. The Group cannot guarantee that its forward-looking statements will not differ materially from actual results.

Disclaimer

Neither this presentation, nor the question and answer session, nor any part thereof, may be recorded, transcribed, distributed, published or

reproduced in any form, except as permitted by Rio Tinto. By accessing/ attending this presentation, you agree with the foregoing and, upon

request, you will promptly return any records or transcripts at the presentation without retaining any copies.

This presentation contains a number of non-IFRS financial measures. Rio Tinto management considers these to be key financial performance

indicators of the business and they are defined and/or reconciled in Rio Tinto’s annual results press release and/or Annual report.

2


Injury frequency rates Per 200,000 hours worked

3

Safety is fundamental to our business

• Whilst we have achieved our lowest ever injury rates, we are yet to achieve a fatality-free year

• We are focused on reducing injury rates and eliminating fatalities

• Health, Safety & Environment elevated to Executive Committee level in 2016


4

Leadership

and culture

Critical risks

and controls Systems

and technology

Learning and

communication

Safety – our strategy


Four key focus areas

• Critical risk management

• Learning critical lessons from

fatal and potential fatal

incidents

• Process safety

• Contractor safety

5

Safety – current priorities

Critical risk management

Layered system of verifications

Front Line workers use critical control

checklists before beginning critical work


6

Process Safety

Three facets:

1. End-to-end process safety

governance structures

2. Substantially improved

understanding of process

safety hazards

3. New process safety standard

with common set of

requirements for managing

technical complexities of

process safety risk


7

The way we work

The way we work symbolises

what we stand for as a

business

It makes clear how we behave

according to our values of

respect, integrity, teamwork

and accountability


• Material risk management and health

critical control monitoring plans

• Mental health

• Vector borne and infectious diseases

• Improving health reporting

• Health risk advisory panel

• Rössing epidemiological study

• Learning and communication

8

Health – current priorities

Dampier Salt – R U OK? day

Mosquito


Accreditation, membership and reporting

• Rio Tinto is assessed and included in a number of sustainability leadership indices:

− Dow Jones Sustainability Index

− FTSE4Good Index

− ACSI – Leading

• We are a member of leading sustainability associations, including:

− ICMM

− International Emissions Trading Association

• We have helped shape and participate in voluntary supply chain and transparency

initiatives:

− Responsible Jewellery Council

− Aluminium Stewardship initiative

− Extractive Industries Transparency Initiative

• We participate in or are accredited under a number of voluntary schemes, including:

− ISO – 14001 and OHSAS 18001

− Global Reporting Initiative

9

Rio Tinto supports and is a member of the following organisations


10

Environment – strategy

Maintain compliance at

the right cost

Look forward and

prepare the business

Minimise our liabilities

• Hazard identification and risk analysis

• Environment controls

• Incident identification, reporting, investigation

• Long-term focus of engagement with regulators and communities

• Horizon scanning

• Risk-focused external advocacy

• Stakeholder engagement

• HSEC in Design

• Innovation

• Design for closure

• Progressive rehabilitation

• Contaminated sites management

• Biodiversity mitigation hierarchy


11

Environment – biodiversity, our journey

2009 Rio Tinto goal of NPI

for all very high & high biodiversity

value sites by 2015

2014

Rio Tinto biodiversity

management workshop

2016 Redefining biodiversity

management

2012

Internal target to have:

biodiversity action plans in place and in progress by

2015

2005 Land

stewardship standard

2007

IUCN assists Rio Tinto to conduct group-wide

biodiversity values assessment

2015 Release of new land disturbance & rehab

control standard

2004 Rio Tinto

announces biodiversity strategy and goal of NPI


12

Biodiversity, managing the risks

• Replacing our NPI aspiration with a performance requirement for sites to

minimise residual biodiversity impact

• Biodiversity to be fully integrated into Rio Tinto environmental assurance

processes

• Focus on what we can reasonably achieve through avoidance,

minimisation and restoration.

• Financing or regulatory requirements maintained; offsets implemented in

response to regulator, financing requirements


Climate change - GHG emissions intensity performance

• In 2008, we set a target of a 10%

reduction to be achieved by 2015

• By the end of 2015, we achieved a

21.1% reduction

• Major contributions from

divestment and closure of old

smelters, and the start of low

intensity operations (Kitimat, Oyu

Tolgoi)

• New target extended to 2020 -

aims for a 24% reduction relative

to our 2008 baseline

13


14

Closure & Legacy Management

• Challenge for the whole

sector

• Life of mine planning

• Structured closure

planning process


15

Closure & Legacy management • Global programme to rehabilitate,

remediate and manage long term

liabilities from closed sites

• Closure and step out from sites in

Europe

• Management under strict EPA

regulations in US

• Experience being passed onto

design, operation and closure

planning of existing sites

Sabart smelter, France


Local school in Fort Dauphin, Madagascar

16

Respect for human rights embedded across Group Core to our business practice:

• Key documents: The way we work, Human Rights Policy,

Supplier Code of Conduct

• Risk-based, integrated approach including stand-alone

studies where appropriate

• General and targeted online and in person training

• Multi-product group, cross-functional human rights

working group for better coordination

Consistent with global guidance and initiatives:

• Support and respect human rights consistent with the

Universal Declaration of Human Rights

• Implementing UN Guiding Principles on Business and

Human Rights

Active in global initiatives – continuous learning

• Voluntary Principles on Security and Human Rights

• UN Global Compact

• OECD Guidelines for Multinational Enterprises

• UN Annual Forum on Business and Human Rights


17

Human Rights – key actions in 2015-16

Governance

• Human Rights Policy reviewed and updated

• New online human rights 101 and function specific (including procurement, security, communities) training modules developed

• Social and human rights risk assessment at Oyu Tolgoi

Reporting

• Continued to include human rights section in Annual and Sustainable Development reports

• Preparation for UK Modern Slavery Act statement (March 2017)

• Corporate Human Rights Benchmark

• UN Guiding Principles Reporting Framework database

Rio Tinto recognised for its human rights approach by an independent NGO, Business and Human Rights Resource Centre

Security and human rights

• Conducted Voluntary Principles on Security and

Human Rights and “use of force” training in

Mongolia, South Africa, Jamaica and Guinea

• Group-level audit of security and human rights;

implementation of audit recommendations

Responsible Supply Chain

• Pilot programme to review the Group’s third

party pre-tender due diligence process and

launch of Know your Supplier procedure

• Development and launch of new Supplier Code

of Conduct

Miners at Oyu Tolgoi, Mongolia


18

Transparency – continued leadership

Rio Tinto supports tax transparency and

initiatives like EITI as a cornerstone of good

governance, to eliminate corruption in all its

forms and to improve understanding of the

mining sector’s economic contribution.

• Global and national involvement in Extractives

Industries Transparency Initiative

o Employee board member

o Employee representatives on multi-

stakeholder groups in Australia, Mongolia,

USA.

• Open and constructive engagement in the

development and implementation of mandatory

reporting legislation in the EU, UK, Canada

and USA

• Reporting consistent with UK legislation (EU

Accounting Directive) and Australian

Government Transparency Initiative

• Sixth Taxes paid report in June 2016 -

constructive contribution to ongoing debate

• We support consistent global standards of

transparency and tax reporting

Community Relations staff member and an agricultural

and livestock expert giving technical advice to a local

farmer, La Granja, Peru


19

Taxes paid 2015 – most extensive report yet

• Sixth Taxes paid report - clear communication

with shareholders on complex topic.

o new information on our principles of tax

planning

o commentary on tax havens

• Rio Tinto is a very significant global taxpayer

and contributor to the economy

o $4.5 billion in taxes and royalties in 2015

o ~ $50 billion aggregate taxes and royalties

paid since first report in 2010

o > US$329 billion aggregate direct

economic contribution since first report

• Report aligns with new requirements of EU

Accounting Directive and compliant with

Australian Government transparency initiative

o 2015 report discloses payments on a “project

by project” basis

o Lower reporting threshold – $100 000

compared to previous $1 million


20

Communities – building enduring relationships

All operations have 5 year communities targets:

• locally defined targets that demonstrate the local economic benefits of employment and procurement of goods and services

• capture and manage community complaints with year on year reduction in repeat and significant complaints.

• annual progress reports from 2017 and achievement by 2020

All operations must meet Communities and Social Performance Standards

• Rio Tinto Communities and Social Performance standards benchmarked against international standards on communities engagement including management of cultural heritage sites and resettlement

• All sites must comply from June 2016

• Business Conformance Audits being conducted to ensure compliance with standards.

Consultation with traditional owners from

local community in Weipa, Australia


21

Communities – Why agreements matter

• We strive to build enduring relationships with our neighbours that are characterised by mutual respect, active partnership and long-term commitment

o minimise negative social impacts

o provide lasting socioeconomic benefits

o maximise local employment opportunities, small business development and local contractor opportunities

o resettlement is avoided where possible or proceeds in compliance with the IFC Performance Standards

o protection of cultural heritage

o recognising Indigenous peoples’ special connection to lands and waters

• Why agreements matter guide launched in 2016

o Builds on “Why cultural heritage/human rights/gender matters” series

o Basis for training and internal workshops in Montreal, London and in USA


The risk management framework

Business

Operations

Rio Tinto Board (and its Committees)

Risk Management Committee

CEO

(and the Executive Committee)

Gro

up R

isk /

Com

pany S

ecre

tarial

Gro

up In

tern

al A

udit

Central Support

(includes Legal and Ethics & Integrity)

22


23

Assurance

Three layers

of assurance

Avoided event

Standards, Guidance, operating practices

First party audits:

Operations

Second party audits:

Business conformance audits

Third party audits:

Internal / external audit

Risk / Hazard


Risk mapping with a risk consequence scheme that aligns with Group Priorities and objectives

24

Total Shareholder

Return

Growth

Cash

flow

Application-specific criteria: Eg, Human Rights, Information Security, Supply

Chain, Resource/Reserve

Standard criteria: Eg, Production, Revenue, Business Integrity, Legal/Reg,

Environment, Community/CSP, People

Bus.Value

(NPV)

Cash

Health Market

reputation

Trusted

Partner*

Trusted

Partner

Group Priorities Safety People Partnership

Safety

Group Objectives

Mandated

Group-level

consequences

Used at all PG,

BU & Site

Used only

when relevant

* Topic of ongoing Deep Dive


SlopeGeotechnical

eventSlope design

Design implementation

Geology

Climatic events

Date uncertainty geology, rock mass strength, hydrology

Pit geometry

Loss of production/shut down

Loss of equipment & infrastructure

Fatality

Environment & community damage

Business interruption & customer confidence

Remediation costs

Reputation and loss of investor confidence

Lawsuits/liabilities

Employee retention

Loss of community confidence

World Class Portfolio

Operation and

Commercial Excellence

FCF Generation

First Line Controls· Geotechnical specialists· Site operating procedures· Clear accountability for slope

hazard management· Hazard awareness training

Second Line Controls· D3 Standard for Management

of Slope Geotechnical Hazards· T&I knowledge sharing· Technical Review Boards

First Line Controls· Onsite slope displacement

monitoring, systems and regular site observations

· External inspections· Geotechnical specialists

Second Line Controls· D3 Standard for Management

of Slope Geotechnical Hazards· T&I assurance processes and

knowledge sharing· T&I D3 standard audit process

First Line Controls· Business resilience &

recovery plans· Emergency response

teams

Second Line Controls· HSEC standards

First Line Controls· Business resilience &

recovery plans· External & internal

communications

Second Line Controls· HSEC standards· Insurance arrangements

Immediate Cause Immediate Impact Secondary Impact

Slope design method

Design/risk acceptance criteria

Availability of suitable equipment

Drill and blast load practices

Natural slopes

Underlying Cause

Drivers and consequences of a geotechnical event 25

Wrap up and Q&A

Sustainable Development workshop London 2016 21 October 2016

Wind farm, Diavik Diamond Mine, Canada

sustainable development workshop - rio tinto€¦ · sustainable development workshop joanne...

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