The company
Rio Tinto is a world leader in finding, mining and processing the earth's mineral resources. Its worldwide operations supply essential minerals and metals that help to meet global needs and contribute to improvements in living standards. Its major products include aluminium, copper, diamonds, energy products (coal and uranium), gold, industrial minerals (borax, titanium dioxide, salt, talc and zircon), and iron ore.
Rio Tinto’s Group activities comprise 30 managed businesses which in total control 57 active mining operations, five remote smelters/ refineries, 19 other operations (including rail, port, power generation, plant, mill, loading/ packing facilities) and land developments, seven development projects, five exploration regions and 19 closed operations. These operations span the world but are primarily in Australia (60%) and North America/Canada (28%), with significant businesses in South America, Asia, Europe and southern Africa. The Group employs over 33,000 people.
Rio Tinto’s mission is to be the resources company of choice. The way in which it operates is outlined in its statement of business practice The way we work. It summarises the Group’s principles and policies for all employees. Underpinning the standards are corporate policies that cover communities, employment, environment, human rights, land access, occupational health, political involvement, safety and sustainable development. The Group sets global standards applicable across all its operations, so there is a consistent approach regardless of the locality. This aspect is important to Rio Tinto as it recognises that a local issue can influence its global reputation.
Mining, like many other high-risk sectors such as oil and gas, construction and building materials, has several key risks that responsible companies need to manage. For Rio Tinto these risks arise through the relationship between the Group and the nature of its operations and its stakeholders (who will vary with locality). These risks are access to land, access to capital, access to markets, security of supply, relations with regulators, liabilities and reputation.
Rio Tinto believes active civil society engagement – the stakeholder approach – is fundamental to the success of the business. The challenges of sustainable development demand multi-sector collaboration. Rio Tinto works in partnership with others in civil society, capturing the synergy of diverse experience and seeking solutions acceptable to all parties. Skills and resources can be pooled to achieve outcomes not likely to be achieved unilaterally.
This case study focuses on Rio Tinto’s stakeholder engagement strategy, which has led to effective partnerships with 16 environmental, educational and indigenous non-governmental organisations.
The drivers
The need to enhance reputation and engage more broadly with civil society were key drivers for the Group’s approach to stakeholder engagement which was initiated in the early 1990’s. This is because at the time the mining industry as a whole was suffering from a poor reputation with respect to community issues and managing environmental impacts.
Taking action
The Group has developed a programme of active civil society engagement. This engagement takes many forms including site relations with local organisations, trusts and foundations established by the Group at local, regional or national level, and global partnerships with major NGOs. This reflects the complex and varied nature of stakeholders’ interaction.
NGOs’ understanding of issues that are relevant to the Group’s core business make the global NGO partnership programme a key element of the Rio Tinto approach. The criteria for partnerships varies, but in deciding a partnership the Group considers whether its focus is on a global issue, whether it will have a global reach and whether it is relevant to the communities in which it operates.
An example of a global issue that demonstrates how this approach works is biodiversity conservation. Through engagement with various stakeholders (conservation organisations, academics and NGOs) it became clear that biodiversity conservation was an issue. As a result the Group engaged with Earthwatch Institute – an international non-government organisation that uses volunteers in scientific field research and education to promote biodiversity – as the Institute had been collecting scientific data at a number of the Group’s key operating sites. Through continued dialogue, both groups recognised that they had more in common than they previously thought. In 1993 they developed the Rio Tinto fellowship programme where 24 employees volunteer on Earthwatch projects. To get value, projects particularly relevant to the Group are selected and the successful fellows from over 400 applicants can choose their favourite.
The partnership has given substantial support to field research projects. Examples include researching the botanical diversity in the rainforests of Cameroon and conserving rainforests in Indonesia. Rio Tinto’s volunteer field assistants have also provided valuable funding, labour and skills to the projects.
This partnership has developed further. For example the Group’s biodiversity policy (Earthwatch and other partners participated in its development) commits the Group to leave a site with more animal and plant life than when it first started – in other words leaving a net benefit to biodiversity. Key to delivering that policy is being able to measure levels of biodiversity, so Earthwatch has been working at the Group’s sites since early 2005 to collect the baseline data.
Rio Tinto has developed partnerships with a diverse group of conservation organisations such as BirdLife International (birds are an indicator of environmental health and biodiversity), WWF Australia, the Eden project in the UK (post-mining regeneration) and the Royal Botanic Garden at Kew (to improve environmental management through practical scientific work).
Developing partnerships with 16 organisations has not been without its difficulties. A common challenge has been to understand the cultural differences in each organisation that determine its approach. For example, the mindset at Rio Tinto is very different from that of a locally based conservation business development manager. However, the experience for Rio Tinto and its partners has been that over time mutual understanding and trust deepens, particularly through joint research and other activity.
Another generic challenge is to ensure professional project management, to deliver effective implementation. Many Rio Tinto partnerships employ a partnership manager, responsible for managing the programme activity with staff from Rio Tinto and the partner organisation.
Detailed partnership agreements are also a feature of each relationship. The underlying theme is that serious engagement demands professional documentation, just like joint ventures or other commercial relationships. Each partnering agreement covers joint objectives and those of each partner, so it is clear from the outset what the expectations are from both sides. This detail is important, as is a process for working through it. All partnerships have a partnership committee comprising key staff from each organisation, typically meeting three or four times a year. Detailed work plans are developed and reviewed annually.
The business benefits
Ultimately, through engagement and partnerships, the Group has been able to understand the issues that concern its stakeholders and build that knowledge into the management of the business. This has provided Rio Tinto with an early warning system to better manage risk, particularly that relating to biodiversity. Partnerships have enabled both the Group and the partners involved to deliver extra capacity to projects. For the Group, it has been a means of gaining help from experts on business critical issues.
Through its various approaches taken with stakeholders, Rio Tinto has demonstrated how it understands that long-term community development is part of its core responsibilities and competencies, and that it is genuine about engagement. Its commitments also demonstrate that the Group is in-situ for the long haul. The average life-of-mine is 30 to 50 years so the Group’s responsibilities are inter-generational, making continued stakeholder engagement over that time frame essential, simply because issues and attitudes change. The overall benefits are trust and reputation management, which 15 years ago were not forthcoming.
In all cases, a better understanding of who the Group’s stakeholders are, what their perception of the Group is and what their expectation of its actions is, has enabled Rio Tinto to take different approaches (at the local, regional or global level) to demonstrate its commitment to the issues raised and so deliver more effective risk management. The company has changed from being reactive to pro-active in terms of managing risks and stakeholder relationships.
Why is it CSR?
Stakeholder engagement is a key aspect of corporate social responsibility because it enables a shared understanding of a company’s impacts with its stakeholders and the company. For Rio Tinto, it has been a decade-long journey that demonstrates the Group’s seriousness, through its desire to learn from different partnerships, in taking responsible actions. Its approach goes beyond compliance and its partnerships approach has gone from sponsorship to corporate partnerships that bring value to each partner by harnessing positively the synergy and commonality they have.
What next?
The Group plans to integrate the partnering approach more deeply across the business and with its partners. By doing so, it aims to enhance its performance further and to address pervasive issues such as climate change, community development, human rights, biodiversity, product stewardship and indigenous self-determination. The Group recognises that it must continuously improve its approaches to meet ever-increasing expectation and oversight.
For more information on Rio Tinto, please contact John Hall on 0207 930 2399 or email John.Hall@riotinto.com.
© Article 13 and CBI – CSR Case Study Series, March 2006
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