Evaluating a company's impact (the case of Rio Tinto)

This week’s read time: 3 minutes

You are reading Green Digest Impact, a bi-weekly newsletter that provides in-depth analyses of companies’ environmental and social impact.

OUR APPROACH

Central to our narrative is the principle of double-materiality, which recognizes that a company's impact is twofold: it affects both the environment and society at large, and in turn, these external factors influence the company's financial and operational performance.

While traditional ESG assessments focus on the latter, we aim to examine companies' direct impacts on these factors. In pursuit of this, we introduce a unique scoring system that quantifies a company's impact.

The insights and analyses presented in Green Digest Impact are brought to you by a partnership between Green Digest and Impaakt, a Swiss-based impact data provider. Contact Impaakt here to explore how they can assist you.

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THIS WEEK’S COMPANY

Rio Tinto

This week, we dive deep into Rio Tinto’s environmental and social impact.

Rio Tinto is a leading British-Australian mining and metals company with a diverse portfolio of minerals and metals, including iron ore, copper, aluminium, bauxite, alumina, diamonds, titanium dioxide, lithium, salt, and borates.

Some interesting facts:

• Rio Tinto's name comes from the Rio Tinto river in Spain, where the company's predecessor, the Rio Tinto Company, was founded in 1873. The river’s color is red due to high concentrations of iron oxide.

• Through its joint venture with Alcoa, the company was the first to develop carbon-free aluminum.

COMPANY’S IMPACT

Rio Tinto’s overall impact score

Rio Tinto has a general impact score of -2.43 (on a scale from -5 to +5). Its impact is spread across 12 UN Sustainable Development Goals (SDGs) and 10 topics, split between positive and negative analyses.

In the socio-economic sphere,

Rio Tinto is the world’s second-largest mining company, playing a crucial role in global industry and economic development. Operating in 35 countries and serving 2,000 customers, the company supplies essential raw materials that support infrastructure, technology, and the energy transition. These include iron ore for steel production, aluminum for electric vehicles, smartphones, and aerospace applications, copper for electrical wiring and renewable energy infrastructure, and lithium for batteries in electric vehicles and energy storage, among others. Rio Tinto employs over 57,000 people worldwide and produces around 400 million tonnes of materials annually.

However, the company’s mining operations have also had significant environmental and social consequences, particularly for local and Indigenous communities. For example, in Mongolia, the Oyu Tolgoi mine has displaced nomadic herders, fragmented pasturelands, and depleted water sources. In Madagascar, its QMM mining operations have contaminated local water supplies with dangerous uranium levels, impacting over 15,000 people. In Papua New Guinea, the company’s abandoned Panguna mine continues to cause serious health issues, including skin diseases, respiratory problems, and pregnancy complications for thousands. The company has also faced multiple fines for air and water pollution violations, with its operations linked to toxic waste, heavy metal contamination, and harmful emissions that contribute to respiratory illnesses and long-term environmental damage. Rio Tinto has also faced serious workplace misconduct allegations. A 2022 report exposed widespread sexual abuse in Australia’s mining sector, with a company survey revealing that 48% of employees experienced bullying.

Environmentally,

Rio Tinto has an annual carbon footprint of over 610 million tonnes of CO₂ equivalent, comparable to the annual electricity usage of over 127 million homes. Additionally, Rio Tinto withdraws around 1.2 billion m³ of water and consumes around 640 million m³ of it annually, with around 10% of its sites located in high and extremely high-risk water stress regions. Further, Rio Tinto generated 977 million tonnes of mineral waste, of which 99% was non-hazardous. In 2023, Rio Tinto's land footprint - total disturbed area - was 384,800 hectares, and the company rehabilitated 55,200 hectares of land in the same year.

The company also has a history of environmental violations. For example, it was fined $2 million for breaching the Fisheries Act and Mining Effluent Regulations in 2023. In another case, in 2022, its QMM mine in Madagascar released 1 million m³ of contaminated water, killing thousands of fish due to high aluminum levels. Additionally, in 2023, Rio Tinto was fined $600,000 for chemical spills in 2020, which released hazardous substances into the St. Lawrence River in North America.

_{*The impact score is current as of February 2025 and may be subject to changes as it is continuously updated.
**You can find details about the scoring methodology here and the information sources here.}

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ESG VS IMPACT SCORE

What is Rio Tinto’s ESG rating?

For comparison, Rio Tinto has an A rating in MSCI's ESG evaluation.

However, ESG Ratings from MSCI ESG Research are designed to measure a company’s resilience to financially material ESG risks and they provide a window into one facet of risk to financial performance. They measure how effectively companies manage ESG risks, not their impact on these factors.

SCORES BY SDG

Rio Tinto’s impact scores by SDG

Positively (and by weight), the company scores the highest in Industry, Innovation and Infrastructure SDG (+2.53), followed by Partnership for the Goals (+2.48) and Reduced Inequalities (+0.85).

Negatively, the company scores the worst in Responsible Consumption and Production SDG (-3.13), followed by Climate Action (-3.58) and Clean Water and Sanitation (-2.93).

*the analysis takes into account the weight of the SDGs

CONCLUSION

Materiality Map & Final Words

So, Rio Tinto’s key social and environmental impact lies in …

its role as a leading global mining and metals company, providing essential materials that enable everyday life, from steel for infrastructure to aluminum for transportation. With a global workforce of over 57,000 employees, Rio Tinto supports the social and economic well-being of thousands of families worldwide. Its operations span across six continents, fostering economic growth, providing employment opportunities, and supporting industries.

However, Rio Tinto's contribution is overshadowed by significant environmental and social concerns. These include water contamination, high carbon emissions, and substantial waste generation, which have severe impacts on local ecosystems and communities. Moreover, the company's operational and workplace record has raised concerns, marked by safety incidents, including injuries and occupational health illnesses, as well as allegations of bullying and harassment. 

Rio Tinto's overall impact score of -2.43 reflects a balance between its positive contributions to economic growth and development and the negative repercussions of its environmental footprint and social practices.

If you’d like to delve deeper into Rio Tinto’s impact, you can explore it here.

If you'd like to learn more about the scoring methodology, you can do so here.

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