Stockholm (NordSIP) – The Norwegian Council on Ethics is reportedly considering advising Norges Bank Investment Management (NBIM) to sell its shareholding in British-Australian multinational company metals and mining corporation Rio Tinto. The Council on Ethics evaluates whether holdings in the portfolio of the Government Pension Fund Global (GPFG) are consistent with its ethical guidelines and is understood to have raised concerns over possible environmental damage linked to Rio Tinto’s operations in the Brazilian Amazon.
NBIM currently holds approximately €2.3 billion worth of shares in Rio Tinto’s UK and Australian entities. In a letter seen by the Wall Street Journal (WSJ), the Council sought to highlight potential deforestation and other environmental damage associated with Mineração Rio do Norte (MRN), a large Brazilian bauxite producer in which Rio Tinto owns a 22% stake, alongside fellow shareholders Glencore and Australian firm South32. In a statement to the WSJ, Rio Tinto disassociated itself from the management of MRN, which it said was in the process of improving its environmental and social credentials. MRN stated that it operates within the local licensing regulations.
NBIM reaffirmed its commitment to sustainability last year with the creation of a new Climate Advisory Board and a warning to investee companies that it intended to step up its activism by holding company directors to account. Rio Tinto had previously been excluded by NBIM on advice from the Council on Ethics in 2008 relating to the risk of severe environmental damage at the company’s Grasberg mine in Indonesia. Rio Tinto was reinstated to the portfolio in 2019 once the company had agreed to sell its stake in the mine.
A new exclusion would be seen as a serious setback for the mining company, given the size and profile of NBIM’s shareholding. The Norwegian fund is one of Rio Tinto’s largest shareholders with a 2.24% stake. This latest issue arises as Rio Tinto attempts to rebuild its public image following an incident in September 2023 in which it damaged a site sacred to the local indigenous population in the remote Pilbara region in Australia. The Pilbara incident was preceded by its destruction in 2020 of a 46,000-year-old sacred Aboriginal site in the process of expanding an iron ore mine. It remains to be seen what action NBIM will take following its dialogue with Rio Tinto. The manager of the GPFG has thus far always followed the recommendations of the Council on Ethics.
