Rio faces pressure over lack of female directors

Rio Tinto shareholders are being urged to vote against the re-election of the mining company’s chairman at its annual shareholding meeting because of slow progress in improving the diversity of its board.

Hermes EOS, which advises pension funds and other institutional investors with around $260bn of assets, said it intended to oppose the re-election of Jan du Plessis as chair of the nominations committee on Wednesday because only two of Rio’s 12-member board are women and all three new nominees are male.

“Due to the lack of diversity and a credible plan to address this imperative issue, and consistent with our voting policy, Hermes EOS recommends voting against the re-election of Jan du Plessis in his capacity as chair of the nominations committee,” Hermes said in a statement.

Mining companies are coming under growing pressure to hire more women as the sector has become notorious for its lack of female representation.

Last year BHP Billiton became the first global miner to adopt a goal for women to make up half its workforce by 2025.

Rio used to have three women on its board, but Anne Lauvergeon retired and the company has put up David Constable, Sam Laidlaw and Simon Henry for election as non-executive directors at the annual general meeting in London Wednesday.

The company’s board will be 17 per cent female, Hermes said.

That is below the FTSE 100 average of 26.7 per cent, according to BoardEx. It is also short of the UK government-backed target that called for FTSE 100 company boards to be 25 per cent female by 2015 and demonstrate a plan to achieve 33 per cent by 2020.

“Although the company has stated its commitment to diversity and to seeking to ensure better gender balance in future appointments to the board, we believe Rio Tinto must demonstrate a credible plan and a serious commitment to reaching the 33 per cent target by 2020,” Hermes said.

Rio Tinto declined to comment on the Hermes statement.

Mr du Plessis, who was appointed chairman of Rio Tinto in 2009, is set to step down as chairman by next year. In November he will become chairman of BT Group.

Rio said in its annual report that the board “continues to value diversity in its broadest sense when considering non-executive director appointments and, in addition to considering gender and ethnicity, will seek to achieve within the boardroom the appropriate balance of skills, experience, independence and knowledge of Rio Tinto and the industry as a whole.”

Mr Constable is a Canadian citizen and former chief executive of Sasol, an energy and chemicals company, while Mr Laidlaw and Mr Henry are both British. Mr Laidlaw is a former chief executive of UK gas business Centrica, while Mr Henry is a former chief financial officer at Royal Dutch Shell.