Rio Tinto
GovernanceGovernance
Governance body oversight and management's role
Board oversight
The Board has ultimate responsibility for our overall approach to climate change. This includes the oversight of climate-related risks, opportunities, strategy, projects, partnerships, physical resilience, engagement, reporting, and advocacy as per the Schedule of Matters. Climate change and the low-carbon transition present material risks and opportunities for our business, forming a key part of our strategy and sustainability and social licence objectives. The Board approves our overall strategy, policy positions, and climate disclosures within this report, delegating specific responsibilities to committees and the Chief Executive. These factors are considered in strategy discussions, risk management, financial reporting, investment decisions, and executive remuneration.
The Board receives regular updates on climate-related matters through the Monthly Performance Review scorecard, which includes KPIs and a detailed decarbonisation scorecard covering operational emissions, offsets, abatement projects and Scope 3 emissions. During the year, climate is also addressed through other agenda items. For example, the Board and the Audit & Risk Committee considered climate-related risks and opportunities as part of their review of the Group's principal risks and uncertainties.
In the past 12 months, the Board agendas have included climate-related items, such as discussions on repowering options for our Pacific Aluminium Operations. This has included oversight of the Group's emissions reduction pathway and its reliance on securing commercially viable renewable energy contracts for the Boyne and Tomago smelters. The Board balances environmental goals with social and financial considerations and continues to oversee these discussions to ensure decisions reflect both strategic priorities and stakeholder impacts.
In 2022, our shareholders supported our first CAP put forward to them by the Board, in a non-binding advisory vote on our ambitions, emissions targets and actions to achieve them. The Board further committed to repeating this vote every 3 years, at a minimum, unless there were significant changes in the interim, in which case the CAP would be returned to the next immediate AGM. The 2025 CAP was approved by shareholders at our 2025 AGM.
Skills and competencies
When considering Board composition, an external consultant is used to support the appointment of new directors. No new non-executive directors were appointed in 2025. This year we undertook an internal review of Board performance and considered the skills of Directors, including those relating to climate and renewable energy. These skills are reflected in a matrix approved by the Nominations & Governance Committee. We expect our Directors to remain informed and up to date on relevant matters.
To support the Board's oversight of climate-related matters, this year the Audit & Risk Committee, joined by members of the Sustainability Committee, received an externally facilitated session on climate governance and considerations for boards in preparing for mandatory climate reporting, including new Australian disclosure obligations. In addition, the Chief Decarbonisation Officer presented on our approach to climate reporting, the organisational model in place to oversee climate-related risks and opportunities, and our approach to mandatory assurance requirements.
Summary of 2025 Board activities
- Approved the Group's strategy and scenarios, including the use of climate scenarios and the impact and opportunities arising from the energy transition.
- Approved the 2025 Climate Action Plan (CAP) and climate-related disclosures in the 2024 Annual Report, including the notes to the financial statements.
- Engaged with investors and civil society organisations following the publication of our 2025 CAP.
- Approved various projects that support the growth in production of transition materials and our internal decarbonisation objectives.
- Oversaw adoption and implementation of the Australian climate reporting standards (AASB S2).
- Updated the Group's operational decarbonisation pathway and associated expenditure.
Sustainability Committee
The Sustainability Committee is responsible for the oversight of key sustainability issues including social and environmental matters that are impacted by climate change, particularly those relating to water and biodiversity. In 2025, the Terms of Reference were updated to reflect these responsibilities including oversight of physical resilience to climate change, which the Committee discusses on a periodic basis. The committee works with the Audit & Risk Committee to ensure the effectiveness of the risk management framework, and to oversee engagement with the external auditors who conduct sustainability assurance, including assurance in relation to GHG emissions.
Audit & Risk Committee
The Audit & Risk Committee is responsible for risk management systems and internal controls, financial reporting processes and the relationship with the external auditors as noted in its committee terms of reference. This involves the oversight of significant areas of judgement relating to the financial statements including those relating to climate, consideration of climate policies, and stress testing our strategy against selected scenarios. It ensures the effectiveness of the risk management framework and also endorses the appointment and fees of the external auditors who assure GHG emissions. The Committee's terms of reference were revised in February 2026 to formalise the oversight of the non-financial reporting process (supported by the Sustainability Committee) including those disclosures relating to climate.
People & Remuneration Committee
The role of the People & Remuneration Committee includes the oversight of the Group's remuneration structure, including the use of short- and long-term incentive plans for the Executive Directors, as reflected in its charter. This includes performance against strategic measures linked to decarbonisation. In 2025, 10% of the short-term incentive plan (STIP) and 20% of the long-term incentive plan (LTIP) were weighted towards decarbonisation, including the progress of our carbon abatement projects.
Management
Investment Committee
The Investment Committee reviews and approves the Group's capital allocation in relation to high-cost projects and climate change research and development.
Chief Executive and Executive Committee
The Chief Executive is responsible for delivering the CAP, as approved by the Board, with the Executive Committee supporting this role. The Executive Committee receives a quarterly decarbonisation progress report which includes updates on abatement projects and other areas of our CAP.
Risk management, portfolio reviews, capital investments, annual financial planning and our approach to government engagement are integrated into our approach to climate change and emissions targets. The annual financial planning process focuses on the short term (up to 2 years). The new growth and decarbonisation strategy is part of the medium-term planning process.
Our Chief Executive's performance objectives in the STIP include delivery of the Group's strategy on climate change. These are cascaded down into the annual objectives of relevant members of the Executive Committee, including the Chief Safety & Technical Officer, and other members of senior management. Decarbonisation is also included as a performance measure in the STIP and LTIP as described above.
Energy and Climate team
Since 2022, we have managed delivery of our CAP through a central team, Rio Tinto Energy & Climate (RTEC). This team, led by the Chief Decarbonisation Officer who reports to the Chief Safety & Technical Officer, has been accountable for all aspects of the CAP.
The RTEC team has been structured around the main areas of our abatement work that drive decarbonisation across our operations, including a dedicated Nature-based Solutions team. A Decarbonisation Office (DO) supports this work by monitoring and forecasting GHG emissions, tracking investment decisions, coordinating our approach to physical climate risks, and engaging on climate-related policies, regulation and reporting. It also prepares the quarterly decarbonisation progress report for the Executive Committee.
As part of the evolution of our strategy and operating model, we are transitioning delivery of decarbonisation projects to our product groups and assets. This shift reflects a move to embed delivery more directly within our operational structure. Central oversight will continue for emissions reductions tracking and investment strategy review, ensuring alignment with our overall climate objectives. The current model, with delivery led centrally by the RTEC team, has remained in place throughout 2025.
Rio Tinto Commercial continues to lead our approach to Scope 3 emissions, given its responsibility for procurement, shipping and customer engagement. Updates on Scope 3 emissions abatement projects are included in the quarterly decarbonisation report prepared by the DO.
StrategyStrategy
Climate-related risks and opportunities
Climate-related risks and opportunities identified
A summary of the material climate change-related risks and opportunities (CROs) relevant to our business:
- Energy transition commodity demand: Customer interest in materials required for the energy transition is accelerating demand for critical minerals such as copper, aluminium and lithium. This presents an opportunity to strengthen our portfolio and capture growth in markets prioritising decarbonisation.
- Global technology development: Low-emissions technologies will support emissions abatement, improve efficiency, and enhance competitiveness. However, uncertainty in deploying breakthrough technologies at scale creates risk, as hard-to-abate emissions could remain exposed to carbon pricing for an extended period.
- Climate policy and regulation: Increasingly stringent and uneven climate change-related policies are driving higher compliance costs and impacting competitiveness, particularly in jurisdictions where carbon pricing mechanisms are in place. Our reliance on fossil fuels exposes us to rising liabilities and operational costs as emissions frameworks tighten.
- Social licence and ability to access ore bodies: Decarbonisation, and meeting stakeholder expectations for a just transition, are increasingly becoming a prerequisite for securing approvals and maintaining stakeholder trust. Failure to act could result in project delays, increased costs and reduced access to resources.
- Acute and chronic physical risks: Extreme heat, extreme rainfall, flooding, sea level rise and cyclones, and water scarcity, drought and wildfire impact worker safety, infrastructure, operations, supply chains and closure planning.
The impact of climate change is recognised as a principal risk within our Group risk management framework and underpins our overall strategy. In 2025, climate change has been elevated to a standalone principal risk to reflect its increasing relevance and potential to materially impact our business, encompassing both physical risks and transition risks and opportunities.
Physical vs transition classification
The risks are explicitly grouped as: energy transition commodity demand (opportunity), global technology development, climate policy and regulation, and social licence and ability to access ore bodies (transition-related), and "acute and chronic physical risks" (physical).
Time horizons
The "Relative impact over time (Conviction)" analysis rates each CRO's relative impact as Low (L), Medium (M) or High (H) across short-term, medium-term and long-term horizons:
| Risk/Opportunity | Short-term | Medium-term | Long-term |
|---|---|---|---|
| Energy transition commodity demand | M | M | H |
| Global technology development | L | M | M to H |
| Climate policy and regulation | L | M | H |
| Social licence and ability to access orebodies | M | H | H |
Definitions of time horizons
For planning purposes, we define short term as up to 2 years, medium term as 2 to 10 years and long term as beyond 10 years. Our short-term timeframe aligns with our annual planning process and is informed by market analysis, allowing us to respond swiftly to immediate market conditions and trends. The medium-term timeframe aligns with extended planning horizons for our growth and emissions abatement projects, while the long-term timeframe considers the full lifespan of our mining assets and infrastructure, as well as the continued impact climate risks and opportunities are expected to have on the business.
Information base used to identify risks
We use scenarios to identify and assess risks and opportunities, including those related to climate change, that may affect our business in the short, medium and long term. Transition risks and opportunities are assessed using short-term market analysis and our Group Conviction, Resilience and Aspirational Leadership scenarios for the medium and long term. These scenarios are macroeconomic in nature and reflect an integrated assessment of climate change, geopolitics, policy developments and broader economic conditions. Physical climate risks are assessed separately using bottom-up, asset-level analysis aligned to discrete climate model-based emissions scenarios, including intermediate and high-emissions pathways.
Our process for identifying material transition risks considers whether climate-related factors, such as regulatory and policy changes, technology developments, community expectations, and physical climate impacts, could have a material impact on our business model, strategy, or financial statements. Climate risks and opportunities are considered material when they could reasonably affect our ability to deliver on strategic objectives, maintain financial resilience, or require changes to operations or investment priorities.
Business model and value chain
Effects on business model and value chain
Although climate change presents clear growth opportunities for our commodities, it also presents physical and transition risks to our portfolio. The transition to a low-carbon economy impacts the commodities we produce and how they are processed in our value chains – particularly for carbon-intensive steel and aluminium. Carbon pricing mechanisms currently apply to parts of our operations and to some of our customers. If climate policy ambition increases globally, this may affect our operational costs, market dynamics and technology development.
Our CAP is designed to address material climate-related risks and opportunities identified across a range of scenarios and time horizons. It integrates actions to mitigate transition risks such as stricter carbon regulations, uneven climate policies and social licence to operate, and to capture opportunities from the growing demand for materials essential to the global energy transition.
We have assessed the resilience of our portfolio under multiple transition scenarios aligned with 1.5°C, 2.1–2.3°C, and 2.5°C outcomes. These assessments consider factors such as emission intensity relative to industry peers, regional exposure to climate regulations, and product suitability for downstream decarbonisation. Our economic performance is stronger in Conviction than in Resilience, where there is higher GDP growth and a faster low-carbon transition. In Aspirational Leadership, higher carbon penalties and potential impacts on demand for mid- and lower-grade iron ore result in mixed performance for iron ore, but stronger demand for other metals than in Conviction.
We regularly review our portfolio to ensure alignment with strategic priorities and climate objectives. This includes divesting assets that do not meet return criteria or strategic priorities, as evidenced by the currently ongoing strategic review of businesses from our former Minerals product group.
Concentration of risks and opportunities
Approximately 77% of our Scope 1 and 2 emissions originate from our Aluminium & Lithium business which is highly energy-intensive. Our single largest lever to meet our 2030 target of a 50% reduction is repowering our Boyne and Tomago aluminium smelters in our Pacific Aluminium Operations portfolio, which together account for one quarter of our emissions and are critical to our decarbonisation pathway.
This is relevant for projects in the Pilbara and Simandou, where community and investor scrutiny is high. Meeting decarbonisation and sustainability expectations is important, as delays or restrictions could lead to increased project costs, slower delivery of growth volumes, or – in extreme cases – project cancellation.
Coastal sites in eastern Australia, New Zealand and Western Australia (Pilbara ports) are classified as high risk under physical climate scenarios by 2050. The damages in the Pilbara are significant for the ports, but the mines and inland sites which represent the majority of asset values are relatively safe from climate damage.
All of our inventory and PPE ($91.6 billion), which together account for 72% of our total assets, are exposed to some degree of unmitigated physical climate-related risk.
Most of our aluminium value chain product (over 85% of our 135.2 Mt CO₂e Scope 3 emissions) is processed in China, where coal-fired refining and smelting are prevalent. The majority of our Scope 3 emissions (95%) stem from our customers processing our products, particularly iron ore (69%) and bauxite and alumina (23%), concentrated in China (80% of Scope 3 emissions) and countries such as South Korea and Japan (approximately 20%).
Strategy and decision-making
Strategic response and transition plan
Our Climate Action Plan (CAP) remains at the heart of our strategy, guiding our strategy to grow production of materials essential for the energy transition, decarbonise our operations, and support our partners in reducing value chain emissions. It also reflects our commitment to a just transition for the communities where we work and to grow responsibly in a changing world.
Our updated 2025 CAP provides an overview of our climate change strategy, commitments, targets, and forward-looking plans. It builds on our 2022 CAP and reflects our commitment to transparency, disciplined investment and long-term value creation. The 2025 CAP was approved by shareholders at our 2025 AGM.
Our ambition is to grow total production by ~3% per year on a copper equivalent basis, while targeting a 50% reduction in our net Scope 1 and 2 emissions by 2030 (relative to 2018 levels) and reaching net zero by 2050.
We have updated our capital expenditure guidance to principally reflect the slower pace of commercially viable technology development that we, our industry, and the world has experienced in hard-to-abate sectors. Pre-2030 abatement is therefore expected to be predominantly delivered through low-capital solutions and proven technologies.
Our pathway to a 50% reduction in our Scope 1 and 2 emissions by 2030 primarily relies on commercially available solutions such as renewable energy contracts and is contingent on advancing viable solutions for our Pacific Aluminium smelters (BSL and Tomago), where discussions are progressing but are finely balanced.
Key assumptions and dependencies
Our pathway to 2030 target is contingent on individual project investment decisions as well as obtaining necessary government and regulatory approvals. The net zero pathway is contingent on individual project investment decisions as well as obtaining necessary government and regulatory approvals. Any delay in concluding discussions with government or delivering repowering projects may impact our ability to meet our 2030 target within this decade.
Actions underway (mitigation)
- Grow in production of materials essential for the energy transition.
- Develop low-emissions technologies for minerals and metals processing, refining and smelting.
- Transition to low-emissions mining vehicles or fuel supply.
- Reduce emissions from our own operations.
- Partner to decarbonise our value chains.
- Actively engage on climate change and energy policy aligned with net zero ambition.
- Increase renewable power.
- Invest in a portfolio of high-integrity voluntary and compliance carbon credits.
- Community engagement and social investment.
- Embed just transition principles in our decarbonisation strategy.
- Enhance our physical resilience to a changing climate, supporting the viability of our assets, our people and communities.
Indirect mitigation and adaptation (customers and suppliers)
We continue advancing our climate commitments by working closely with customers, suppliers and partners to decarbonise the steel, aluminium, shipping and procurement value chains. We work with more than 20,000 suppliers across complex multi-layered supply chains, prioritising engagement with 50 of our highest-emitting suppliers. Decarbonisation criteria are embedded in our evaluation processes for new sourcing in high-emission categories.
Resourcing
We are transitioning delivery of decarbonisation projects to our product groups and assets, while central oversight (RTEC team, Decarbonisation Office) continues for emissions reductions tracking and investment strategy review. In the medium term, we will invest up to $10 billion (in real terms) annually in sustaining, replacement and growth capital.
Progress against previous plans
In 2025, we continued to implement our CAP, progressing toward our 2030 target and 2050 net-zero ambition. Achievements included: finalising the Jinbi PPA; continued procurement of renewable energy and storage for BSL; started a battery swap electric haul truck trial at Oyu Tolgoi; completed construction and commissioning of Évolys™; commenced construction and commissioning of the Yarwun Hydrogen Calcination Pilot; and made strong progress on nature-based solutions, enabling more than 500,000 hectares of high-integrity projects. Challenges and lessons learnt included the BlueSmelting™ demonstration plant showing that industrial-scale deployment would require significant capital investment that is not yet commercially viable, and delays to Pilbara renewables and self-generated renewable diesel scale-up.
Financial position, financial performance and cash flows
Current financial effects
At the end of 2025, closure provisions on our balance sheet totalled $17.8 billion (2024: $15.7 billion).
Based on information to date, and where separately identifiable, none of the identified climate-related risks or opportunities are expected to result in a material adjustment to the carrying amounts of assets and liabilities disclosed in the financial statements within the next annual reporting period.
Any material current physical climate-related impacts are disclosed in our financial statements as, among other line items, physical damage or disruption could primarily affect asset carrying values and cash flows. No such instances were noted in FY2025. Separately, costs to enhance asset resilience are embedded within our operational and capital expenditure processes and therefore cannot be separately identified.
Currently, carbon costs (real terms, 2025 prices) are <$0.1 billion. Currently, 82% of our global Scope 1 GHG emissions (19.6 Mt CO2e) are covered by emissions-limiting frameworks. Currently, 59% of our Scope 1 and 2 emissions (18.5 Mt CO2e) are classified as hard-to-abate, with $0.56 billion spent/committed co-investment in industrial scale R&D to support solutions for hard-to-abate emissions. Our total decarbonisation spend for 2025 was $612 million (2024: $589 million).
Financial statement impact references given for each CRO include: transition materials metrics (consolidated sales revenue, capital expenditure, operating assets); estimation of asset lives; decarbonisation spend and decarbonisation capital commitments; carbon abatement spend on procurement of carbon units and renewable energy certificates; additions to property, plant and equipment with a primary purpose of reducing carbon emissions; carbon tax sensitivity on impairment charge; useful economic lives of power generating assets; renewable PPAs accounted for as derivatives; close-down, restoration and environmental cost.
Anticipated financial effects
Underlying EBITDA is projected to increase by around 40–50% from the 2024 baseline to 2030 (based on long-run consensus prices, consolidated volume growth, and unit cost reductions) as a result of volume growth supported by the diversification of our portfolio. Aluminium demand is forecast to grow by ~1.2x by 2035, lithium by ~3.4x, copper by ~1.3x, and steel by ~1.1x. Our production outlook on a CuEq basis shows a 3% CAGR to 2030, supported by the addition of Simandou and our lithium assets at Arcadium and Rincon.
Annual penalties from carbon costs could potentially reach $0.3 billion by 2030 and $2.6 billion by 2040 without further emissions reductions. 7% of our operating costs ($3.1 billion) are attributable to fossil fuels.
Our updated capital expenditure forecast for decarbonisation is now $1–2 billion to 2030, a reduction from the previously issued range of $5–6 billion, including $0.6 billion in the period 2025–2027. In the medium term, we will invest up to $10 billion (in real terms) annually in sustaining, replacement and growth capital. Long-term PPAs are expected to underwrite up to $8.5 billion in competitive greenfield energy projects, subject to final approvals and successful delivery.
Relief and explanation for unquantified effects
Quantitative financial impacts have not been disclosed for the following CROs, with qualitative narrative provided instead:
- Energy transition commodity demand: As demand drivers (energy transition, macroeconomic conditions, supply availability, commodity prices) are interrelated, it is not possible to separately identify or quantify the financial impact of demand attributable to the energy transition from general market demand.
- Global technology development (opportunity): While these technologies are already informing strategic positioning, most remain in development or pilot stages and their short-term impact on competitiveness is still emerging, so has not yet been quantified.
- Social licence to operate and access orebodies: The impact is difficult to isolate, being inherently qualitative and dependent on factors such as stakeholder trust, community relationships and permitting processes, which cannot be consistently expressed in monetary or numerical terms.
- Physical risks: Given the variability of physical hazards, modelling approaches and inherent uncertainty in outcomes, we are unable to produce precise quantitative estimates of anticipated financial impacts under each scenario. Instead, we assess potential exposure and impact using our Value at Risk (VaR) analysis, supplemented with qualitative assessments.
Anticipated portfolio impacts derived from scenario analysis are subject to inherent uncertainty due to multiple interdependent estimates and assumptions. Our macroeconomic modelling incorporates a range of variables and, as a result, isolating and measuring the anticipated impact of specific CROs can be challenging.
Climate resilience and scenario analysis
Climate resilience assessment
Our CAP is designed to address material climate-related risks and opportunities identified across a range of scenarios and time horizons. We have assessed the resilience of our portfolio under multiple transition scenarios aligned with 1.5°C, 2.1–2.3°C, and 2.5°C outcomes. Key elements of the plan include reducing operational emissions through renewable electricity deployment, transitioning mining operations away from diesel, and lowering process emissions in smelting and refining. These measures strengthen resilience under all scenarios considered and support delivery of our 2030 and 2050 emissions targets, while enabling a just and orderly transition.
Through disciplined capital allocation, operational decarbonisation, and portfolio flexibility, we are resilient to identified climate-related risks and well-positioned to capture opportunities arising from the global energy transition.
Financial resources and flexibility
Financial resources remain available to support our decarbonisation strategy. Our Group capital allocation framework guides investment decisions that support both growth and climate-related initiatives. We maintain flexibility to respond to emerging risks and opportunities, as demonstrated by our ability to fund major growth projects such as copper at Oyu Tolgoi, high-grade iron ore at Simandou, and lithium at Rincon. In addition, our recent acquisitions show the availability of funds to pursue inorganic growth opportunities aligned with our strategy.
Asset redeployment and portfolio flexibility
We regularly review our portfolio to ensure alignment with strategic priorities and climate objectives. This includes divesting assets that do not meet return criteria or strategic priorities, as evidenced by the currently ongoing strategic review of businesses from our former Minerals product group.
Areas of uncertainty
Our economic performance is stronger in Conviction than in Resilience, where there is higher GDP growth and a faster low-carbon transition. In Aspirational Leadership, higher carbon penalties and potential impacts on demand for mid- and lower-grade iron ore result in mixed performance for iron ore. The uncertainty reflects the highly unpredictable decarbonisation pathways of non-OECD countries beyond 2050.
How and when scenario analysis was carried out
We use scenario analysis to identify and assess material risks and opportunities, including those related to climate change, that may affect our Group in the medium and long term. All material Group operations are included in our analysis.
Transition risks and opportunities are assessed using short-term market analysis and our Group Conviction, Resilience and Aspirational Leadership scenarios for the medium and long term. These scenarios are macroeconomic in nature and reflect an integrated assessment of climate change, geopolitics, policy developments and broader economic conditions.
Physical climate risks are assessed separately using bottom-up, asset-level analysis aligned to discrete climate model-based emissions scenarios, including intermediate (RCP4.5/SSP2-4.5) and high-emissions (RCP8.5/SSP5-8.5) pathways.
We do not undertake climate modelling ourselves, but rather determine the approximate temperature outcomes by comparing the emissions pathways to 2100 in each of our scenarios with the Shared Socio-economic Pathways (SSP) set out in the Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report. In 2024, we updated the scenario framework used to assess the resilience of our business under different transition-related scenarios. This year, the Conviction scenario was rerun to reflect updated assumptions and temperature outcomes, while the Resilience and Aspirational scenarios were not rerun as no material changes were made to their underlying assumptions or inputs.
The emissions pathways in Conviction and Resilience limit temperature rises to around 2.1–2.3°C (previously 2.1°C), and around 2.5°C by 2100 respectively, roughly aligning with the IPCC's intermediate emissions scenario (SSP2-4.5). The Aspirational Leadership scenario limits warming to 1.5°C (aligning with SSP1-1.9), consistent with the goals of the Paris Agreement.
We review our scenario approach every year as part of our Group strategy engagement with the Board. For planning purposes, we define short term as up to 2 years, medium term as 2 to 10 years and long term as beyond 10 years.
Dependent on location and time horizon, our internally applied carbon prices range from $0/t CO2e to $250/t CO₂e.
There are no portfolio adjustments made to the Group's medium- to long-term plan under the various scenarios.
Risk ManagementRisk Management
Processes for identifying, assessing and managing climate-related risks
Integration into risk management
The Board approves our risk appetite and oversees our principal risks. The Board is supported in monitoring a range of material financial and non-financial current and emerging risks by the Audit & Risk and Sustainability committees. Climate-related risks and opportunities are integrated in our enterprise-wide risk management framework. These are identified by product groups and supporting functions, then included in the appropriate risk register. These will be assigned a risk owner and evaluated on the maximum reasonable consequence (non-financial and financial) and likelihood of the risk. Consequences may include the impact on Group free cash flow or business value, or reputation and licence to operate. These risks are escalated to the appropriate level of management for oversight and action. Processes remain unchanged from the prior year.
Under our 3 lines of defence model, all employees are empowered to own and manage the risks that arise within their area of responsibility. Our Enterprise functions are our 2nd line of defence, providing deep subject matter expertise and objective challenge. Our Internal Audit function provides independent assurance. Where required by law, or where deemed appropriate, we also engage third parties to provide independent assurance. Where risks are material to the Group, they are escalated to the Risk Management Committee and, as appropriate, to the Board or its committees.
We actively monitor and assess the potential impact of climate risks and opportunities on our operations and business through scenario planning. Climate-related opportunities are prioritised by considering factors such as shareholder value, asset cost base, emissions abatement potential, and competitiveness against the marginal abatement cost curve.
In 2025, climate change has been elevated to a standalone principal risk to reflect its increasing relevance and potential to materially impact our business. All Group principal risks and uncertainties are reviewed on a quarterly basis by the Enterprise Risk function and the Risk Management Committee (RMC).
Physical risk identification and assessment process
Our climate risk management approach is built around 4 pillars:
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Weather/climate analytics and insights: We apply advanced weather and climate data to support operational planning, emergency response, and long-term resilience, including short-term severe weather forecasts, climate outlooks, catastrophe modelling, and long-term climate projections (CMIP5 and CMIP6). Climate projections are available for all assets, including non-managed sites, covering over 60 variables and multiple emissions scenarios. Flood risk modelling has been completed for 100% of assets across present-day, medium, and long-term horizons.
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Physical risk identification and assessment: All sites within our portfolio are exposed to varying degrees of physical climate risk. Our approach to quantifying and assessing physical risk covers individual assets (bottom-up) and Group level (top-down). We first identify climate risks and opportunities across varying time horizons and emission scenarios. Next, we evaluate their potential financial and non-financial consequences and likelihood. Then we prioritise these risks by materiality for effective risk management and appropriate resource allocation. This process is integrated within the Rio Tinto Risk Management Information System. The scope of our assessments includes our operations and the environments in which we operate, our people, the communities who host us and our supply chain.
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Resilience planning and adaptation: Our resilience planning identifies the most appropriate measures to manage climate risks and adapt to them. We comprehensively evaluate an investment decision before funding is approved.
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Monitoring and evaluation: We actively and regularly monitor risks, with clearly defined roles and responsibilities. We continually evaluate the latest generation of climate change data and emerging technologies to assess the risk profile of our assets and infrastructure over time. Assessment processes are revisited where we have identified a material change to the economic, social, environmental or physical context of the risk.
Financial exposure modelling (VaR)
We have continued to progress our Value at Risk (VaR) analysis by advancing physical climate change risk assessments through financial modelling at the product group level. In 2025, we completed assessments for our Aluminium & Lithium, Copper and Iron Ore product groups. Our climate physical risk modelling analysis, undertaken in collaboration with an external consultant, estimated expected financial losses from damage to individual assets, across various time horizons and emission scenarios caused by physical climate hazards, considering: asset portfolio and archetypes; climate scenarios, time horizons and hazards (nine hazards modelled, including flooding, coastal inundation, extreme heat, cyclonic wind, extreme wind, soil subsidence, forest fire and freeze-thaw); annualised damage (AD); and productivity loss (PL).
Considerations and limitations
Our climate physical risk modelling acknowledges limitations and uncertainties due to the dynamic nature of the earth's climate and unpredictable future GHG emissions. These models represent plausible futures, not predictions. The accuracy of our analysis depends on the quality of asset data and assumes no changes in operations or design standards. The modelling reflects only climate-related physical hazards and current asset configurations, and does not include network effects or wider supply-chain impacts. This analysis is iterative, evolving with new insights and projections.
Metrics & TargetsMetrics and Targets
Climate-related metrics
Greenhouse gas emissions
2025 gross Scope 1 and 2 GHG emissions (adjusted equity basis): 31.5 Mt CO2e (2024: 31.7 Mt CO2e). Scope 3 GHG emissions: 575.7 Mt CO2e (2024: 569.8 Mt CO2e).
| Equity GHG emissions (Mt CO2e) | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Scope 1 emissions | 24.0 | 23.0 | 23.3 | 22.8 | 22.8 |
| Scope 2: Market-based emissions | 7.5 | 6.9 | 9.3 | 9.6 | 10.1 |
| Total gross Scope 1 and 2 (market-based) | 31.5 | 29.9 | 32.7 | 32.3 | 32.9 |
| Carbon credits | 1.2 | 1.0 | – | – | – |
| Total net Scope 1 and 2 (with carbon credits retired) | 30.3 | 28.8 | 32.7 | 32.3 | 32.9 |
| Scope 2: Location-based emissions | 8.5 | 7.8 | 7.8 | 8.2 | 8.5 |
| Scope 3 emissions | 575.7 | 569.8 | 572.5 | 572.3 | 558.3 |
| Operational emissions intensity (t CO2e/t Cu-eq) | 6.1 | 6.3 | 7.0 | 7.1 | 7.3 |
| Direct CO2 from biologically sequestered carbon | 0.8 | 0.5 | – | – | – |
Emissions are reported using the equity share approach. Emissions reporting complies with the WRI/WBCSD GHG Protocol: A Corporate Accounting and Reporting Standard (Revised Edition) (2015), GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2013) and the Technical Guidance for Calculating Scope 3 Emissions (version 1.0).
Scope 1 emissions are direct GHG emissions from facilities we own or control, including fuel use, onsite electricity generation, anode and reductant use, process emissions, land management and livestock. Scope 2 emissions arise from purchased electricity, heat or steam. From 2023, we report Scope 2 using both the location-based method and the market-based method, which accounts for contractual instruments such as renewable energy certificates and exclusive energy attribute contracts.
Disaggregation of Scope 1 and 2 (location-based) (equity basis)
| Scope 1 | Scope 2 | Total | |
|---|---|---|---|
| Consolidated accounting group | 14.4 | 2.7 | 17.1 |
| Other investee | 9.6 | 5.8 | 15.4 |
| Total | 24.0 | 8.5 | 32.5 |
Scope 3 sources (equity basis, Mt CO2e)
| Category | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| 1. Purchased goods and services | 12.8 | 12 | 15.2 | 16.7 | 19.5 |
| 2. Capital goods | 1.8 | 1.7 | 2.2 | 1.8 | 1.9 |
| 3. Fuel and energy-related activities | 4.5 | 4.2 | 4.4 | 4.5 | 4.5 |
| 4. Upstream transportation and distribution | 7.1 | 6.5 | 6.8 | 6.5 | 5.9 |
| 5. Waste generated in operations | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 |
| 6&7. Business travel and employee commuting | 0.6 | 0.5 | 0.8 | 0.5 | 0.4 |
| 9. Downstream transportation and distribution | 2.9 | 2.1 | 2.4 | 2.3 | 2.7 |
| 10. Processing of sold products - Iron ore | 398.5 | 395.9 | 399.9 | 386.6 | 364.6 |
| 10. Bauxite and alumina | 135.2 | 134.0 | 127.1 | 138.2 | 144.5 |
| 10. Titanium dioxide feedstock | 4.7 | 4.5 | 4.9 | 5.9 | 4.9 |
| 10. Copper concentrate | 1.1 | 0.7 | 0.5 | 0.5 | 0.5 |
| 10. Salt | 5.6 | 6.6 | 7.0 | 7.1 | 7.2 |
| 10. Other | 0.8 | 1.0 | 1.2 | 1.6 | 1.6 |
| Total | 575.7 | 569.8 | 572.5 | 572.3 | 558.3 |
Categories excluded: Category 11 (Use of sold products) - not applicable; Category 8, 12, 13, 14 - not applicable; Category 15 (Investments) - Rio Tinto reports using equity share approach, so Scope 1/2 emissions of investments are included in Scope 1/2 and Scope 3 within other applicable categories.
Energy - equity basis
Total energy consumed 2025: 516.8 PJ. Electricity from renewable sources: 77% (2024: 78%).
Carbon credits retired
We retired approximately 1.01 million Australian Carbon Credit Units (ACCUs) to meet our 2024 Safeguard Mechanism compliance obligations. For 2025, we expect to retire approximately 1.17 million ACCUs. Total credits counted towards net emissions for 2025: 1,169,079.
Transition risks
82% of our global Scope 1 GHG emissions (19.6 Mt CO2e) are covered by emissions-limiting frameworks (total gross global Scope 1 GHG: 24.0 Mt CO2e). 59% of our Scope 1 and 2 emissions (18.5 Mt CO2e) are classified as hard-to-abate. 7% of our operating costs ($3.1 billion) are attributable to fossil fuels.
Physical risks
All of our inventory and PPE ($91.6 billion), which together account for 72% of our total assets, are exposed to some degree of unmitigated physical climate-related risk, supplemented by annualised damage risk scoring by region and hazard (Low <0.2%, Medium 0.2-1%, High >1%).
Opportunities
Transition materials metrics (KTM/OTM production, capital expenditure, revenue): Of consolidated sales revenue, KTMs accounted for US$7,608 million (13%) in 2025 and US$4,728 million (9%) in 2024. Lithium, copper (KTM); silver, molybdenum, aluminium, alumina, bauxite, minerals (OTM); gold, iron ore (TNM) production, capex, operating assets and 2026 guidance disclosed in the transition materials metrics table.
Capital deployment
Total decarbonisation spend for 2025 was $612 million (2024: $589 million), comprising capital expenditure, investments and carbon credits of $182 million (2024: $283 million), and operational expenditure of $430 million (2024: $306 million). Updated capital expenditure forecast for decarbonisation is $1-2 billion to 2030. In the medium term, we will invest up to $10 billion (in real terms) annually in sustaining, replacement and growth capital.
Internal carbon prices
Dependent on location and time horizon, our internally applied carbon prices range from $0/t CO2e to $250/t CO₂e.
Remuneration
In 2025, 10% of the short-term incentive plan (STIP) and 20% of the long-term incentive plan (LTIP) were weighted towards decarbonisation, including the progress of our carbon abatement projects.
Climate-related targets
Scope 1 and 2 target
Target details: 2025 target: Reduce our net Scope 1 and 2 emissions by 15% by 2025 (relative to 2018 levels). 2030 target: Reduce our net Scope 1 and 2 emissions by 50% by 2030 (relative to 2018 levels). 2050 target: Net zero by 2050 (relative to 2018 levels).
Metric: Operational emissions: Scope 1 and 2 GHG emissions, adjusted equity basis. Objective: Mitigation of Scope 1 and 2 GHG emissions. Scope: Applies to our economic interest (equity share) of all operational emissions, standardised to current corporate and asset ownership in the 2018 base year (adjusted equity). Our targets cover more than 95% of our operational emissions. Scope 2 emissions are calculated using the market-based method. Base year: 2018. Target type: Percentage (2030), Absolute (2050). Influence of international climate agreements: Targets support the Paris Agreement objectives.
Third-party validation: In 2021, KPMG provided limited assurance over the alignment of our targets with efforts to limit warming to 1.5°C. Scope 1 and 2 GHG emissions are audited to reasonable assurance annually by third-party auditors which validates Rio Tinto's performance against target. In 2025, KPMG provided limited assurance over our 2025 progress reporting against our CAP in addition to its reasonable assurance of our Scope 1 and 2 emissions, and limited assurance of Scope 3 emissions.
Review process: Decarbonisation review sessions are held each year as part of the regular ExCo schedule to discuss the overall decarbonisation roadmap and abatement portfolio, including any future changes to targets or commitments.
Revisions to the target: Any revision to the target will be disclosed and explained in the Rio Tinto Annual Report. No revisions have been made to the target in the current period.
GHGs covered by the target: CO2, CH4, N2O, HFCs, PFCs, SF6 (NF3 not applicable). Gross vs net emissions target: Net emissions target: 50%; Gross emissions target: 40%. Sectoral decarbonisation approach: We concluded that our Scope 1 and 2 target for 2030 was aligned with efforts to limit warming to 1.5°C when we set it in 2021, but the target was not set using a sectoral decarbonisation approach as there was no sector-specific methodology then, and this remains the case today. Planned use of carbon credits: The use of carbon credits towards our target will be limited to 10% of our 2018 baseline. In 2025, our net emissions include the use of Australian Carbon Credit Units (ACCUs) by our Australian assets to comply with the Safeguard Mechanism in the calendar year 2025.
Performance against targets: Gross Scope 1 and 2 GHG emissions (adjusted equity basis, Mt CO2e): 2025: 31.5 | 2024: 31.7 | 2018: 36.7. Net: 2025: 30.4 | 2024: 30.7 | 2018: 36.7. As of 2025, our gross adjusted Scope 1 and 2 emissions are 14% below 2018 levels; after applying high-integrity offsets, net adjusted Scope 1 and 2 emissions are 17% below baseline.
Scope 3 value chain targets
We have not set an overall Scope 3 emissions target due to the limited direct influence we have on the decarbonisation activities of our customers, required maturation of technology adoption and grid decarbonisation in customers' host countries. Instead, we hold ourselves accountable on near-term, action-oriented, and measurable targets:
Steel decarbonisation targets:
- Support our customers' ambitions to reduce their carbon emissions from blast furnace–basic oxygen furnace (BF-BOF) process by 20–30% by 2035.
- Reduce our net Scope 3 emissions from IOC high-grade ores by 50% by 2035, relative to 2022 (subject to funding approval and technical feasibility).
- Commission a shaft furnace–direct reduced iron (DRI) + electric smelting furnace (ESF) pilot plant by 2028 (revised from 2026), in partnership with a steelmaker.
- Finalise study on a beneficiation pilot plant in the Pilbara by 2026.
Alumina decarbonisation targets:
- In 2025, partner with at least 2 bauxite customers with the goal of improving energy efficiency and reducing emissions, focusing on digestion improvement technology; controlling or removing organic compounds from the refining process; and technical options to reduce moisture content in our bauxite. (Met in 2025.)
Shipping decarbonisation targets:
- Reach net zero shipping by 2050 across our shipping footprint.
- Fulfil First Movers Coalition (FMC) pledge of 10% of time-chartered fleet to be running on low-carbon fuels by 2030 and progressing to 100% of time-chartered fleet by 2040.
- Reduce emissions intensity by 40% by 2025 (5 years ahead of the target set by the IMO), and deliver 50% intensity reduction by 2030 (relative to IMO's 2008 baseline).
Procurement decarbonisation targets:
- Engage with 50 of our highest-emitting suppliers on emissions reduction, focused on driving supplier accountability for setting and delivering against their decarbonisation targets.
- Implement decarbonisation evaluation criteria for new sourcing in high-emitting categories (raw materials, explosives, global equipment).
Performance against Scope 3 targets
Against the IMO's 2008 baseline year for emissions intensity, our 2025 shipping performance showed a 39% improvement, falling 1% short of our ambition to deliver a 40% reduction by 2025, largely due to weather impacts in the Pilbara region. We continue to progress towards our 2030 target of a 50% reduction in emissions intensity. In 2025, we met our alumina partnership targets. About 54% of our steel-producing customers by direct iron ore sales volume have set public targets to reach net zero or carbon neutrality by 2050; nearly 40% of our bauxite sales are to customers with net zero emissions targets, though only 22% are aiming for net zero by 2050.