Rio Tinto (ASX:RIO) share price dips amid pledge to halve direct emissions by 2030

The Rio Tinto Limited (ASX: RIO) share price is in the red today despite the company getting a little greener.

At the time of writing, shares in the mining giant are trading for $97.69 – down 0.4%. For context, the S&P/ASX 200 Index (ASX: XJO) is 0.31% higher.

The Rio Tinto share price is in focus today as the miner announces plans to halve its scope 1 and 2 emissions by 2030.

Let’s take a closer look at today’s news.

Rio Tinto share price dips despite “ambitious” climate policies

In a statement to the ASX, Rio Tinto says it is “tripling” its previous emissions reduction target.

On top of halving its direct emissions by 2030, the miner says it will achieve a 15% reduction by 2025. This is 5 years earlier than anticipated.

Rio says these “ambitious” targets are supported by about $7.5 billion in direct investments to lower emissions between 2022 and 2030.

Rio Tinto will also “prioritise growth capital” in commodities vital for this transition, such as copper and nickel, with an ambition to double growth capex to about $3 billion a year from 2023.

Despite this, the Rio Tinto share price is slightly down.

What are Scope 1 and 2 emissions?

For clarity, according to the Australian Government, scope 1 emissions are caused directly by a company’s activities. For example, the driving of trucks up and down a mine. Scope 2 emissions are indirect and caused by a company’s operations. An example of this for Rio Tinto would be using electricity sourced from fossil fuels to power its mines.

Scope 3 emissions result from either a company’s supply chain or how the company’s products are used. For example, the emissions caused by the manufacturing of steel that uses Rio-mined iron ore.

Scope 3 emissions are not part of Rio’s commitments. However, the company will “accelerate its investment in R&D and development of technologies that enable its customers to decarbonise”.

What did management say?

Rio Tinto Chief Executive, Jakob Stausholm, said:

Rio Tinto is taking action to strengthen our business and improve our performance by unleashing the full potential of our people and assets, working in partnership with a broad range of stakeholders.

All our commodities are vital for the energy transition and continue to benefit from ongoing urbanisation.

We have a clear pathway to decarbonise our business and are actively developing technologies that will enable our customers and our customers’ customers to decarbonise.

We are able to do this, while continuing to provide attractive returns to our shareholders in line with our policy, because we have a strong balance sheet and world-class assets that deliver strong free cash flows through the cycle.

Rio Tinto share price snapshot

Over the past 12 months, the Rio Tinto share price has increased 2.4%. Year to date, Rio shares have plummeted 15.4%, largely due to the recently falling iron ore price.

Its 52-week high is $137.33 and its 52-week low is $90.04. Rio has a market capitalisation of approximately $151 billion.

The post Rio Tinto (ASX:RIO) share price dips amid pledge to halve direct emissions by 2030 appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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