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18 Feb 2022 - Everyday Respect: Rio Tinto's harmful workplace culture
By: Alphinity Investment Management

Everyday Respect: Rio Tinto's harmful workplace culture

(Adviser & wholesale investors only)

Alphinity Investment Management

08 February 2022


Workplace harassment is a serious concern that prevails across the Australian miners.

In February 2022, Rio Tinto (RIO) published the findings of an independent review of its workplace culture, a project it pro-actively commissioned in March 2021 to assess whether harmful, discriminatory behaviour occurred within its operations, and if so its extent. The eight-month study was conducted by former Australian Sex Discrimination Commissioner Elizabeth Broderick. It consisted of more than 10,000 people sharing their personal experiences via online surveys as well as 100 group listening sessions, 85 confidential individual listening sessions and close to 140 individual written submissions. We acknowledge the bravery of all the individuals who raised their voices and shared their stories.

As shareholders of RIO, we commend the intent and transparency of the report, which should be a catalyst for positive change in the mining industry. Its findings are nonetheless confronting.

We are saddened and disappointed by the extent of the bullying, harassment and racism revealed in the review.

The report indicates these behaviours are systemic across the organisation, suggesting a broader cultural failing among its Australian mining company peers. Reading the statistics alongside witness recounts emphasises the severity of the problem: 28% of women and 7% of men have experienced sexual harassment at work; 21 women reported actual or attempted sexual assault; and 40% of men and 32% of women identifying as Aboriginal or Torres Strait Islander had experienced racism, as well as discrimination reported against other ethnicities. RIO's workforce is still close to 80% male despite efforts to increase diversity.

While the report itself is deeply concerning, we give RIO, and particularly its renewed board and senior management team, credit for proactively launching such a comprehensive examination. The report is not just an act of transparency by RIO: the purpose of the 26 recommendations in its Framework for Action is to demonstrate the company's intent to propagate cultural change well into the future. As investors, the insights and recommendations are eye-opening and will prove valuable in our engagements with RIO and with other companies.

Being the first of the Australian mining companies to publish its findings, the degree of media attention and criticism of the report is unsurprising. However, these issues do not appear to be confined to RIO alone. For example, BHP revealed last August that is had terminated 48 employees in the previous two years over sexual harassment claims. Last year's Western Australian parliamentary inquiry into the treatment of women at fly-in-fly-out mine sites received many submissions from mining companies, oil and gas companies, unions and other organisations involved in the industry. This suggests the issues are sadly widespread.

Balancing our engagement tone

We believe it is important that investors are careful in how they engage with companies that transparently report on difficult topics. If investors are too critical, it will likely deter further disclosures and honest discussion on problems and solutions. It could also discourage other companies from sharing detailed reports. But rewarding disclosure alone, without providing constructive feedback and continuing to engage and monitor progress, won't necessarily drive improvement. It is a double-edged sword and we need to think deeply when deciding how to respond.

Instead of striking the messenger, we believe we should recognise RIO's courage in its transparency, focus on fully assessing the situation, and just as importantly, consider the actions that will substantively address the issues raised.

So, what next?

Evidence suggests that these issues are not confined to RIO alone. We therefore expect that other miners, mining service providers, and oil and gas companies should consider the findings of the report, and implement similar reviews into their own cultures.

As investors, we see the findings from the RIO report as an opportunity for us to:

  • Build an internal framework to assess workplace culture that draws on the report findings and recommendations, thereby enhancing our own awareness of good management and disclosure practices around a sensitive topic for companies.

  • Actively engage with RIO to identify key cultural or safety measures that can be tracked and reported on as part of its Annual Report, to ensure and publicly demonstrate that cultural change is occurring in response to the review's findings. Some sort of culture metric also appears to be required as part of KPI setting across all managerial levels, starting from the top.

  • Actively engage with other mining companies, service providers and oil and gas companies on workplace culture throughout 2022. We intend to encourage other companies operating in the sector to conduct similar in-depth independent reviews on workforce culture and to transparently disclose both findings and intended corrective actions, if any. We believe this exercise should be conducted on an annual basis to track progress. In addition, we will seek disclosure of the same reporting metrics identified by RIO, and similar links to management remuneration across the organisation.

We have since conveyed a letter to investee companies in the mining, oil and materials sector, and others that might face similar issues. It introduced our concerns with the report findings and intent to open the conversation on culture and safety in upcoming engagements.

We view this as a chance to raise the bar on how workplace culture is addressed in the resources industry and in Australia more broadly. Attitudes towards heritage management were transformed after the Juukan Gorge incident in 2020, and we now hope to see a similar material shift in the way the management of sexual harassment, bullying and discrimination is approached.

Author: Moana Nottage, ESG and Sustainability Specialist


Funds operated by this manager:

Alphinity Australian Share FundAlphinity Concentrated Australian Share FundAlphinity Global Equity FundAlphinity Sustainable Share Fund

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