Rio Tinto Shareholders Address Labor Abuses

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May 10, 2000

Rio Tinto Shareholders Address Labor Abuses

Two union-backed shareholder resolutions call on the European mining giant to adhere to international human rights conventions.

SocialFunds.com -- While shareholders in the U.S. are considering nearly 200 social and environmental resolutions this year, shareholder activism is typically more subdued in the European Union, characterized by corporate engagement and dialogue. But shareholder resolutions at the U.K.-based Rio Tinto annual meeting are drawing international attention from union supporters.

At the annual meeting in London today, Rio Tinto shareholders considered two resolutions designed to address the checkered human rights record of the world's largest private mining company. Institutional investors with over $40 billion in assets are supporting these resolutions, the first international shareholder campaign with trade unions from several countries taking on a single corporation.

"We are asking fund managers and trustees to speak out on the risks of investing in companies like Rio Tinto, which do not have good standards of corporate governance or credible workplace codes of labor practice," said John Monks General Secretary of the U.K. Trade Union Congress. The Trade Union Congress (TUC) is one of several union groups from around the world supporting the campaign.

The resolutions called for adherence by the company to International Labor Organization (ILO) human rights conventions and changes on the board of directors. The shareholders ask the company's board of directors to become more accountable on human rights issues through the appointment of a single, independent Deputy Chairman assigned to that purpose.

Rio Tinto has operations in 40 countries around the world, employing more than 34,000 people with net earnings of $1.2 billion last year in an industry with high environmental and health impacts. Although they have apparently made steps toward promoting sustainable development, their worldwide operations have left a record of labor and human rights abuses in their wake.

For instance, Workers at the Rossing Uranium Plant in Namibia are filing suit against Rio Tinto after contracting cancer, but the company refuses to accept responsibility. Closer to home in the U.K., former workers from the decommissioned Capper Pass tin smelter are suing Rio Tinto after contracting cancer, but the company has resisted and delayed the release of medical records.

Ten mineworkers were killed in an avoidable 1998 mining accident at the Lassing talc mine, Austria, which was apparently being mined illegally. In Australia, Rio Tinto management played a direct part in the drafting of new labor laws, in breach of ILO standards on the right to organize.

In an unprecedented international effort, trade unions from around the world are joining TUC in the Rio Tinto campaign. Those taking part include the Australian Construction, Forestry, Mining and Energy Union (CFMEU), the Australian Council of Trade Unions (ACTU), the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), and the International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM).

Pension funds hold 20 percent of Rio Tinto shares. Those supporting the Rio Tinto resolutions include the Co-operative Insurance Society Ltd (CIS), one of the largest shareholders in Rio Tinto with more than $35 billion under management, the West Yorkshire Pension Fund, and the South Yorkshire Pension Authority.

"It should come as no surprise that shareholders are welcoming our proposals with open arms," said Monks of the TUC. "Institutional investors increasingly see the value of annual general meeting resolutions that promote long-term shareholder value."

While the Rio Tinto resolutions are carefully couched in the interest of shareholder value, the potential impact on international human rights would be a breakthrough for shareholder activism in the European Union.

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