The ethics adviser to Norway’s sovereign wealth fund has engaged with mining giant Rio Tinto about the impact of a Brazilian organisation on deforestation.
The Council on Ethics to the $1.5 trillion Government Pension Fund Global (GPFG) has been in dialogue with Rio Tinto about its minority stake in Mineracao Rio do Norte (MRN), according to Eli Lund, head of secretariat of the council.
“I can confirm that we have been in contact with Rio about MRN,” Lund told Carbon Pulse. “The Council on Ethics is in contact with a number of companies every year. The assessment process takes time and often implies extensive contact with companies under assessment.”
“Most of the companies that the council contacts, will not be excluded from the fund,” Lund said, following reporting on the topic from Bloomberg UK and Wall Street Journal.
Lund could not share the likelihood of the fund divesting from Rio Tinto. The role of the Council on Ethics is to evaluate whether the fund’s investment in companies is inconsistent with its Ethical Guidelines, according to its website.
The Norwegian fund is one of Rio Tinto’s largest stakeholders, owning a 2.24% stake worth $2.7 billion, as of the end of last year, according to Reuters.
“While the MRN operation is not managed by Rio Tinto, it has been working to progressively improve its environmental and social performance to meet industry best practice and our expectations as a shareholder,” a spokesperson for Rio Tinto told Reuters.
London-based Rio Tinto owns 22% of MRN, while Glencore owns 45%, according to Bloomberg. MRN – the largest Brazilian producer of bauxite, the raw material for aluminium – has been operating since 1979 in the Amazon.
Rio Tinto was excluded from the fund in 2008 based on an assessment of the risk of severe environmental damage related to the Grasberg mine in Indonesia.
However, the fund revoked the exclusion in 2019 following Rio Tinto agreeing to sell its interest in the Grasberg mine, fund manager Norges Bank Investment Management (NBIM) said at the time.
Fund investees may be excluded or placed under observation if there is an “unacceptable risk” that the company contributes to or is responsible for “severe environmental damage” or “unacceptable greenhouse gas emissions”, according to the Council of Ethics annual report 2023.
In 2023, the council focused on cases relating to the loss of biodiversity, deforestation, and pollution from mining activity. It recommended the exclusion of four companies under the environment criterion.
Previous concerns raised at Rio Tinto have addressed its impacts on deforestation, water contamination, and Indigenous Peoples rights violations.
In February, NBIM highlighted the significant impacts on biodiversity linked to its investees’ sectors.
Africa’s critical minerals mining boom could wipe out more than one-third of the continent’s ape population, with short-term offset plans failing to compensate for negative impacts, researchers found in a study published Wednesday.
By Thomas Cox – t.cox@carbon-pulse.com
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