On Sunday 24 May, mining giant Rio Tinto blew up a sacred Aboriginal site in Western Australia that showed 46,000 years of continual occupation.
This site was unique. It contained more than 7,000 artefacts, including grind stones that are believed to be the earliest use of grindstone technology in Western Australia.
It also contained thousands of bones from middens which showed changes in fauna as the climate changed, including a 28,000-year-old kangaroo leg bone sharpened into a pointed tool.
The act was legal due to an outdated law from 1972, which apparently doesn’t allow for renegotiations even when new information has come to light, as was the case in this instance.
But was it right?
Of course not.
Peter Stone, a world-renowned archaeologist and UNESCO chair in Cultural Property Protection and Peace at Newcastle University in the UK, told the ABC that the destruction of the rock shelters was comparable to the Islamic State’s destruction of Palmrya.
Whether you agree with this comparison or not, it is clear that the world has lost a unique piece of human history, which even covered habitation during the last ice age.
Asset Owners Respond
So how will a responsible asset owner with a thoughtful environmental, social and corporate governance (ESG) policy respond in this case?
Will it mark down the company in its investment research? Will it file a complaint with the company? Will it divest?
Are there any consequences for the destruction, or is it simply business as usual?
Institutional investors are known not to comment publicly on individual investments, but in our rounds we spoke to ESG specialists at some of the larger funds, some of whom certainly felt compelled to comment on this act.
“Just because it is legal, doesn’t mean it is okay,” one investor said.
They acknowledged that the law didn’t require a reassessment of the approval to destroy the site when new archeological evidence was found, but they argued that Rio Tinto should have had internal systems and processes in place to review the situation.
“It is a big enough corporation with plenty of resources. It should have known better.”
They also criticised the company’s response when the destruction came to light. Yes, the company has apologised to the traditional owners of the area, but it came a full week later in the form of a statement by Rio Tinto Iron Ore chief executive Chris Salisbury.
“Something of this nature requires a response by the Chief Executive Officer or Chairman, not some Head of Iron Ore,” one investor said. “And the apology should have been made as soon as it was known, not a week later.
“The apology is too little, too late. How does Rio Tinto think this is okay? And does this indicate cultural problems within the company? I mean, what other things is it doing that it thinks is okay?”
Rio Tinto Engagement with Asset Owners
[i3] Insights understands that a group of large asset owners are collaborating with each other on engaging with Rio Tinto on the issue.
In this process, they need to establish what exactly has happened and how. They need to obtain the facts and then will provide the company with feedback from an investor’s view on this issue.
They are also looking to obtain an understanding of how this will be treated in the future, and what the company is doing to make reparations.
Divestment is unlikely, largely because investors have said in the past that such a measure would deprive them of their ability to force change within companies that go off the rails.
But it certainly will go into the ESG handbooks as a case of how not to behave as a corporate.
For a general guide on ESG issues in Australia, please see here.
[i3] Insights is the official educational bulletin of the Investment Innovation Institute [i3]. It covers major trends and innovations in institutional investing, providing independent and thought-provoking content about pension funds, insurance companies and sovereign wealth funds across the globe.