But such a comparison misses the mark.
Sure, the banks were guilty of monumental governance failures, misconduct and some instances of illegality around their treatment of (mainly) wealth management customers and, in the case of the Commonwealth Bank and Westpac, their breaches of anti-money laundering laws.
Large and small investors alike were appalled at the behaviour of banks but (importantly) also at the billions of dollars in shareholder funds that flooded out of the big fours’ doors in the form of compensation, remediation and legal settlements.
They have been able to place a monetary value on the governance failures and the banks’ social licence breach. In response there was an epic spillage from the board and senior management ranks among major financial service institutions and a slashing of bonuses.
At this stage there is little suggestion that there is an immediate financial consequence for Rio and its shareholders.
Rio will continue to sustain reputational damage and all mining companies, particularly those operating in the Indigenous culturally rich area of Western Australia’s Pilbara region, now face the prospect of closer scrutiny from traditional owners and governments about their mining activities.
Right now the Rio issue is one that sits at the heart of its social licence, its governance and its ethical responsibilities.
Several large investors including AustralianSuper, Legal & General, Aberdeen and Cbus are among those that have been willing to publicly register some concern. But it is understood many more have held discussions with Rio chairman Simon Thompson since the company detonated its explosives a few weeks ago.
First State Super is said to have removed Rio from a socially responsible portfolio. But none of the investors have announced a decision to sell out of the company or even to sell down their position.
Proxy advisors I spoke with suggested many investors were concerned about Rio’s actions but had not indicated whether they thought there should be consequences nor whether they would push for them.
No white-hot outrage – no votes of retribution.
There are a few obvious options should the shareholders decide to pursue the company. Given its UK listing, all directors of the Rio board needed to be voted on at each year’s annual meeting. But both the Australian and UK annual meetings took place a few months ago (in April and May) before the Juukan Gorge blast so the opportunity to vote against any director won’t arise until next year.
Shareholders could also seek to apply pressure to the board over executive bonuses. There is some talk that this is being considered.
For its part, Rio is handling the disaster in line with a typical large company playbook. Its initial response was to hunker down, defend its action as legal (which it was) and hope the situation blows over.
When it didn’t, the ball was passed internally to the corporate affairs department to manage the message. Part of the exercise is to find a sufficiently senior executive to stand in the firing line. In this instance it was Rio’s iron ore boss Chris Salisbury. Rather than admitting the company did anything wrong Salisbury apologised to the traditional owners for the distress it caused.
As the weeks have progressed, incrementally more conciliatory responses from Rio have been piling up – each admitting to a little more responsibility than the last.
“Rio Tinto unreservedly apologises for what happened at Juukan Gorge. We have made it clear to the PKKP [Puutu Kunti Kurrama and Pinikura people] that we are very sorry – it was never our intent to cause distress. Rio Tinto employees are hurting and I am personally distressed,” Salisbury said earlier this week days after the government announced a Senate inquiry into the matter.
The prospect of the inquiry and a rising tide of community outrage was enough to prompt the public relations damage control experts to wheel out the chief executive Jean Sebastian-Jacques – who until then had been conspicuously absent from the debate.
He added his words of contrition saying he was “very sorry for the distress it had caused the Puutu Kunti Kurrama and Pinikura traditional owners”.
On Friday Rio took its response a step further – announcing an internal inquiry – or more specifically a board-led review of its heritage management processes in iron ore “with a focus on recommending improvements to the effectiveness of its internal processes and governance”.
Leading the charge to work on doing better is Michael L’Estrange – an independent director and ironically a member of the board’s sustainability committee.
Elizabeth Knight comments on companies, markets and the economy.