(Repeats item issued earlier. The opinions expressed here are
those of the author, a columnist for Reuters.)
LAUNCESTON, Australia, Sept 14 (Reuters) - Rio Tinto's board
may have stemmed the bleeding of the mining giant's public image
with the belated dumping of Chief Executive Jean-Sébastien
Jacques after a widely-panned initial punishment for blowing up
two significant Aboriginal rockshelters.
Jacques, along with iron ore boss Chris Salisbury and Simone
Niven, head of corporate relations, the unit responsible for
dealing with indigenous communities, will depart in the wake of
the fallout over the destruction of the caves at an iron ore
mine in Western Australia state.
But if Rio's board of directors thinks this is the
end of the issue, they are likely to be mistaken -- and they are
also likely to face increasing scrutiny of their own role in the
The destruction of the caves at Juukan Gorge wasn't illegal,
but it drew the ire of the local Aboriginal people, and the
concern over Rio's actions didn't take long to spread to
investors, politicians and the wider public.
The company's board initially responded by cutting the
bonuses of Jacques and the other executives, apologising and
promising new procedures to ensure something similar didn't
But these moves were condemned by investors and activists as
a mere slap on the wrist, and a sign that Rio still didn't
really understand the importance of community relations.
The question that should be asked is whether Rio's board has
the right people to drive a process whereby environment, social
and governance (ESG) issues are placed at the heart of the
This is a question that should also be extended to Rio's
global peers, such as BHP Group, Glencore and
Looking at the independent directors of these four global
mining titans reveals that while they have made some progress on
gender and racial diversity, most of the directors have similar
backgrounds, raising the possibility of group thinking.
The independent directors of Rio include three people with
investment banking backgrounds, four from oil and gas, one
geologist, one former public servant/diplomat and one academic,
with a background in public policy.
BHP's board has three directors with diverse manufacturing
and industry backgrounds, three mining executives, a former oil
and gas executive, two investment bankers and an executive with
a technology background.
Glencore and Anglo American have a largely similar
collection of independent directors, with industry, mining and
This doesn't suggest these directors don't have valuable
skills, but they may lack the sort of experience that comes with
handling complex ESG issues.
THE TENTH MAN
Imagine for a moment how the conversation may have gone when
the Rio board discussed what action to take against Jacques and
the other executives in the wake of Juukan Gorge cave blasts.
Was there any board member with the necessary experience to
recognise that Rio would be flayed in the media, did anyone ask
how would this be perceived by investors and the wider public?
It may well be the case that there was vigorous and heated
discussion among Rio's directors, but the initial response
showed they didn't understand the depth of the problem they were
What the board probably needed was somebody akin to the
Israeli "tenth man" theory, a so-called devil's advocate who is
able to present a completely contrarian position to what the
rest of the board may think.
But for such a director to function effectively, they would
have to come from a background very different to the majority of
Rio's current independent directors.
They could not be part of what may be termed the "directors
club," where people sit on multiple boards of top-flight
They could not be an executive from the same industry, or
indeed from related industries, and they couldn't be an
investment banker, lawyer or accountant.
One suggestion is to appoint a recently retired senior
business journalist or editor, somebody whose first instinct is
to ask: "How would I report this decision, what would I ask the
chairman and the chief executive?"
Business leaders, by nature of the still largely hierarchal
nature of their organisations, are more used to people telling
them what they want to hear and having people agree with them.
Somebody who has spent a career questioning what they are
being told, challenging corporate public relations-speak and
focusing on the real importance of issues would be of extreme
value to a board.
It's relatively easy, and comfortable for the existing
board, to find like-minded people with extensive business
experience to help steer and oversee a diverse business such as
Finding somebody to constantly challenge the board, the
management and their decisions would be far harder, and less
comfortable for the incumbents.
But until companies like Rio realise the game has changed,
and ESG likely will become the main driver of their business
success, they are likely to prove unwilling to make the dramatic
changes the situation clearly justifies.
(Editing by Richard Pullin)