Background Info

In 2021 Rio Tinto Group launched a new business strategy focused on low-carbon transition. At Rio Tinto's annual general meeting held in April 2022, investment management firm Sarasin & Partners voted against the 2021 company's financial statements1 due to its lack of disclosures on actions to align with a 1.5C temperature resilience target and the related financial implications (i.e., net zero accounting disclosures). Rio Tinto is a significant emitter of greenhouse gas emissions with large Scope 3 emissions.

Assume you are a business consultant, reporting to the Board of Directors of Rio Tinto, the world's second- largest metals and mining corporation. Rio Tinto Group is a dual-listed company traded on the London Stock Exchange (trading as Rio Tinto Plc) and the Australian Securities Exchange (trading as Rio Tinto Ltd). You have been contracted to provide a business report to Rio Tinto's Board of Directors which:

Questions

1. discusses why Rio Tinto's current poor net zero accounting disclosures disadvantage its shareholders taking an agency theory lens. In your response, ensure you explicitly define, explain and apply agency theory.

2. discusses why Rio Tinto should provide high quality net zero accounting disclosures taking an institutional theory perspective. In your response, ensure you explicitly define, explain, and apply institutional theory.

3. provides recommendations to Rio Tinto on how to address Sarasin & Partners' criticisms on its net zero accounting disclosures. Hint: You may refer to the net zero accounting disclosures (particularly Scope 1, 2 and 3 emission disclosures) of Rio Tinto's peer firms (e.g.,Anglo American, BHP Group, Fortescue Metals Group and Vale)