In any organisation, where does the buck stop? This month we saw senior board members of Rio Tinto stand down due to their role – or lack of it – in the decision to destroy sacred Aboriginal sites in Pilbara, Western Australia. The act of blowing up a cave system where there is evidence of 46,000 years of human habitation is itself outrageous and unforgiveable to most of those on the outside looking in. However, it is also bewildering. Put simply, how does something like that happen?
The answer depends on who you believe. As with all controversial decisions, there is always a back story and our individual views on that will be shaped by our own assumptions and prejudices. Some will instinctively argue that global corporations of this type simply ride roughshod over community interests. Others – especially those involved in industry or commerce – may feel a modicum more sympathy, in the belief that most businesses are not trying to be the bad guys. Almost all of us, after all, do rely on the commodities that the industry provides, even if the idea of mining seems a bit too distasteful for some of our sensibilities.
Rio Tinto’s initial argument was that senior executives were not aware of the decision – theirs was an error of omission, not commission. For some time it felt as though that might wash and that a knuckle rap in the form of cancelled (multi-million pound) bonuses would set the record straight. This month that narrative changed. Under international pressure from the media, civil rights groups, environmental campaigners and – perhaps most importantly – investors, Rio Tinto took the view that the buck stopped at the top (or nearly the top).
What does that signify for the role of senior leadership? Best practice states that a CEO should delegate, not get involved with every decision. So, is it justified that Jean-Sebastién Jacques claims he didn’t know of the significance of the cave’s archaeological and societal importance until too late?
Perhaps, but in that case the problem is not leadership, but governance. The job of the board is to put in place the right systems so that the right decisions are taken at the right level of seniority. The rules of good governance are therefore a double-edged sword for senior leaders. In being accountable but not responsible, they relinquish control of matters that can dictate their downfall.
It is a high risk game and there will be highs and lows. You must wonder how Jacques must view the charm offensive being waged by Bernard Looney and his team last week – dubbed ‘BP Week’ – to promote its new net zero business strategy. BP’s star is, for now, in the ascendancy. The challenge is to keep it rising. Doing so will rely not just on Looney’s own vision and media savvy, but on his ability to make sure that rhetoric at the top translates into action by his colleagues on – and in this case under – the ground.
Matt Lloyd is an associate director at Camargue