08 December 2020

Aboriginal heritage after Juukan

This article was written by Sally Audeyev.

Rio Tinto’s blast of the 46,000 year old Juukan rockshelters in the Pilbara has transformed community awareness and perspective of Aboriginal heritage. Occurring in the midst of the Black Lives Matter movement and just before National Reconciliation Week, it drew significant community interest. The commentary and reaction in the months since the incident have highlighted the importance of Aboriginal heritage within broader environmental, social and governance (ESG) considerations. It demonstrates that companies need to do more to protect heritage alongside their operations, and to build and maintain relationships with traditional owners as a key stakeholder. The reaction of governments, community and investors, particularly superannuation funds, to the incident has been a key driver of this transformational change and carries important lessons for company boards and management.

What happened at Juukan Gorge

On 24 May 2020, Rio Tinto detonated charges in an area of the Juukan Gorge, approximately 60km north west of Mt Tom Price in the Pilbara region of Western Australia, as part of its Brockman 4 mining operations. The resulting blast significantly impacted two ancient deep time rock shelters, dated with evidence of human occupation over 46,000 years ago. The incident caused significant distress to the Puutu Kunti Kurrama and Pinikura People (PKKP People), and a large public outcry followed.

This occurred in circumstances where Rio Tinto held a Ministerial approval under the Aboriginal Heritage Act 1972 (WA) to undertake mining and disturb the rock shelters, and had entered a comprehensive agreement with the PKKP People. As a result, the destruction of the rock shelters raised questions about the adequacy of the underlying framework for protecting Aboriginal heritage sites. Rio Tinto undertook a Board review of its heritage management practices and published the results.

The incident has led to 3 senior executives at Rio Tinto losing their jobs, along with considerable scrutiny of Rio Tinto’s governance, corporate culture, cultural heritage practices, agreements with Traditional Owners, and of the legislative regime that provided Rio Tinto with the legal authorisation.

Outcomes, so far

On 11 June 2020, the Senate referred the Juukan Gorge incident and associated legal regime to the Joint Standing Committee on Northern Australia (the Committee) for inquiry and report. The Committee has conducted several public hearings and is currently due to publish its report by 9 December 2020.

In parallel, the Western Australian government is progressing its review of the Aboriginal Heritage Act 1972 (WA) which commenced more than 2 years ago. It released a consultation draft of the Aboriginal Cultural Heritage Bill 2020 (WA) on 2 September 2020. The Bill is proposing a new approach to cultural heritage protection that will lead practice in Aboriginal heritage protection across Australia.

Media coverage and the information released has raised community awareness and expectations about how cultural heritage is protected in the mining industry, investors have been seeking assurance about heritage protection and risk management and companies are working with their indigenous stakeholders to revisit their approach.

The incident has profoundly changed the risks associated with activities that impact on cultural heritage across Australia and the world and has highlighted ESG issues as a primary consideration for companies (both in the mining industry and more broadly across Australia).

Influence of shareholders

We have seen an increase in the influence of shareholders. Two examples highlight this; Rio Tinto’s Board-led review, and shareholder resolutions and calls for assurance.

(a) Rio Tinto Board Review

Rio Tinto launched an internal Board-led review in June 2020, headed by independent director Michael L’Estrange. A key finding was that there were 3 critical phases where better decision-making could have avoided the incident. The Rio Tinto Remuneration Committee considered the findings and recommended (with approval of the Rio Tinto Board (minus the Executive Directors)) that three executive officers have their short term incentive plan payments withheld, as well as an approved reduction of the CEO’s long term incentive plan.

Following the Board Report, major investors and superannuation funds publicly expressed their dissatisfaction with the penalties proposed and called for greater transparency and accountability. AustralianSuper met with Rio Tinto to seek tougher penalties, saying the bonus cuts fell significantly short of appropriate accountability. Following the increasing calls from investors, the Rio Tinto board of directors met to discuss an escalation of the company’s response, which resulted in the resignation of the three senior executives who were found to bear some responsibility for the incident.

(b) Shareholder resolutions and calls for assurance

Investors and superannuation funds have also called for immediate action from mining companies. We are seeing an increase in the level of scrutiny from shareholders relating to the alignment of company operations with their public commitments.

A coalition of global investors including HESTA, the Australian Council of Superannuation Investors and AXA recently issued a letter to some of Australia’s biggest mining companies, seeking assurances regarding relationships with First Nations peoples and Indigenous communities. The letter was mainly targeted at miners with operations in Australia, such as BHP, Glencore, FMG, South32, Newmont and Northern Star, however companies such as Vale, Barrick and Pan American Silver Corp were also included.

The Australasian Centre for Corporate Responsibility also recently proposed shareholder resolutions to be put to BHP and FMG at their respective AGM’s, calling for an immediate pause on mining activities that would “disturb, destroy or desecrate” culturally significant Indigenous sites until reviews of state heritage legislation have been completed, and for a commitment to the non-enforcement of any relevant contractual or other provisions (including confidentiality provisions) that limit the ability of Traditional Owners to speak publicly about ACH concerns on their land.

The BHP shareholder resolution was withdrawn by the ACCR on 13 October 2020, the day before it was due to be voted on. BHP had earlier announced that it had worked with the First Nations Heritage Protection Alliance to agree principles to enhance the influence and voice of traditional owners in relation to heritage protection.

The risk of cultural / operational disconnect

Much criticism focussed on the disconnect between Rio’s actions and the company’s values.

“The destruction of the Juukan caves sits oddly with the company's stated pride in its extensive engagement with Indigenous communities in Australia,” noted the Australian Financial Review’s Chanticleer column, drawing particular attention to the fact that Rio’s board report revealed the Company’s CEO, Jean-Sebastian Jacques was apparently unaware of the caves’ significance.

Rio’s board report explains its failures as organisational: “Linked-up decision-making was lacking at critical points. Some dimensions of governance and oversight needed more rigour. Aspects of an inclusive work culture needed to be stronger. Means of escalating unresolved issues to more senior leaders were not always accessible or utilised. There was inflexibility in processes and systems to accommodate material new information in appropriate ways, accentuating silos rather than connectedness in organisational structures.”

It appears that these organisational failures contributed to operational decisions that didn’t fully consider corporate values, particularly after legal agreements and authorisations had been granted to disturb the caves: “the risk to social licence was not fully apparent from the perspective of mine operations, creating a ‘blind spot’ for operational management.”

KWM’s annual Directions survey of corporate clients and senior business figures consistently finds ‘maintaining an appropriate corporate culture’ as among boards’ highest priorities. Incidents as damaging as this illustrate why, and also demonstrate where any corporate effort to ensure operational culture is aligned with values must begin – at the top.

Heritage Framework

The disconnect between community and corporate values and what happened at Juukan has also raised questions about the adequacy of the framework for protecting cultural heritage.

Cultural heritage is often protected by legislation that requires approval to disturb, and agreements between those proposing disturbance and Aboriginal groups. Agreements have often been reached early in project development when rights to access land is first sought and in the context of clarifying the respective rights and interests of native title holders alongside the new tenure and the new land use proposal. Heritage has long been a critical part of this discussion, including because Aboriginal groups usually claim and, more often in recent times, have been determined to hold a native title right to protect sites and objects of significance.

The Juukan incident has shone a light on the nature of Aboriginal heritage and these processes. The community is more aware of the significance of Aboriginal cultural heritage to Aboriginal people, its broader significance to humanity and about the laws, agreements and corporate processes in place, and is seeking assurance that these are adequate. In particular, questions have been raised about whether agreements and approval processes are suitable for ensuring decisions to disturb cultural heritage values are being made with appropriate and adequate information about the cultural values.

Looking forward

The Juukan Gorge incident highlights the influence that shareholders and the community can have on a company’s business, laws and operational decision making. It has also highlighted several areas where corporate culture, corporate processes, agreement making and regulation can be improved to ensure decisions to operate alongside or disturb cultural heritage values are made with appropriate and adequate information about the cultural values.

The importance of heritage protection has increased exponentially, driving change in the way those decisions are made. Traditional Owners now have significantly more influence in decisions about how activities occur which might impact heritage values.

We are seeing significant change in processes for identifying and assessing heritage values alongside commercial values, new approaches in agreements about how operations can happen alongside heritage protection, review of corporate decisionmaking processes, governance and escalation mechanisms, and new approaches to risk management. Legislative change is also occurring to reflect and embed the new standards.

A step change is occurring in the nature of cultural heritage management agreements and plans across Australia. The trend is towards ensuring cultural heritage values are identified comprehensively up front, Traditional Owners having significant influence in land use decisions as they affect heritage values, clearer identification of management controls to minimise impact on heritage values and putting in place processes for determining what happens if new information arises. We are seeing a fundamental change in what is an acceptable allocation of risk in this area.

Most importantly, there is a continuing and fundamental shift occurring in the importance, strength and nature of relationships across organisations with Traditional Owners, particularly at senior leadership levels.

The legacy of this incident will likely be better outcomes across Australia for Traditional Owners, business, governments and all Australians.

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