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By Gianmarco Migliavacca
Mining majors are finally getting serious on workplace culture and D&I – creating an opportunity for investors to drive change.
Deeply problematic workplace culture issues in the mining industry received full media and investor attention in February when Rio Tinto (RIO) (OTCPK:RTNTF) (OTCPK:RTPPF) unveiled the shocking findings of an external review of its workplace culture. The company’s CEO was forced to apologize for several episodes of harassment, bullying and racism across the organization.
We believe that the publication of that report was a defining moment, not just for Rio Tinto but for the entire mining industry, on highly sensitive workplace culture issues. It opened a window of opportunity for us as active investors to engage and ask for more ambitious objectives. We have sought much-needed change not only in workplace culture but also in diversity and inclusion (D&I), which, in a male-dominated industry, is a related problematic topic given poor statistics regarding women and minority representation in mining workforce and management.
In the two months following the report, we engaged not only with Rio Tinto but also with other mining majors, trying to better understand their workplace culture and D&I efforts and, more importantly, seeking realistic engagement objectives for future discussions. We generally asked for more regular disclosure of key performance indicators (KPIs) around workplace culture to enable proper monitoring, setting of interim and longer-term targets (if not already established) for D&I, and pushed for the inclusion of workplace culture and D&I targets as factors in long-term executive variable compensation.
A positive surprise was to find that all the companies we engaged with were more open-minded than in the past on these sensitive topics and recognized that Rio Tinto’s report was valuable as a benchmarking tool to drive internal discussion and to do more. For instance, Glencore (OTCPK:GLCNF) (OTCPK:GLNCY) informed us that it had recently created an internal task force to coordinate the implementation of best practices and some recommendations from the Rio Tinto report. Recently, BHP’s (BHP) (OTCPK:BHPBF) (OTCPK:BHPLF) CEO hosted a D&I and workplace culture investor roundtable, and while admitting that his company is on a “journey” to improve its workplace culture, he encouraged investors to connect more with him on these issues.
We expect our ongoing engagement efforts with mining majors on D&I and workplace culture to help drive improvement in the industry, enable us to make more informed investment decisions by integrating even more deep ESG analysis into our investment processes, and ultimately achieve higher potential returns from our investments in this key sector – seeking to allocate more resources to companies where we see more progress as a result of our engagement efforts.
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