Despite concern from some councillors, the Otago Regional Council will continue to invest in Rio Tinto for now rather than "cherry-picking" the companies in its portfolio.
A review of the council’s ethical investment settings found at present there were several companies that might be considered "red flag" investments.
Among them was the British-Australian multinational metals and mining giant.
A staff report to yesterday’s audit and risk subcommittee included a suggestion the subcommittee might want to introduce a supplementary list of prohibited securities and place Rio Tinto on that list.
Cr Alexa Forbes was the first to reject that approach.
"We have to be able to stick with our exclusions within a way of doing it, rather than picking out a company that we just don’t want to have.
"Cherry-picking — that’s not our job.
"We need to find a provider that we’re happy with, because it has the exclusions that we’re looking for."
Cr Kevin Malcolm agreed.
The decision around the council’s environmental, social and governance (ESG) investment settings should come when the council reviewed its investment managers and its statement of investment policies and objectives (Sipo), he said.
Cr Elliot Weir said "if a company like Rio Tinto" was not excluded, it showed there were issues with the present ethical investment settings.
The independent review of the council’s ESG settings was part of a wider review of its managed fund.
Several "red flag" investments at the council were uncovered because the reviewer used different criteria for ESG controversies than the council’s investment managers at JBWere, the staff report from council finance general manager Nick Donnelly said.
The review flagged three companies in the ORC investment portfolio that were not ruled out at present, but would be under the reviewer’s criteria.
"These were Rio Tinto, Apple and Meta.
"The review also noted Asistocrat Leisure fell outside the permitted threshold for revenue from gambling activity and JBWere immediately reviewed and removed this investment from the portfolio."
Mr Donnelly went on to say "some councillors" had raised concerns with the council portfolio including Rio Tinto.
But under the council’s present settings the company had an "orange flag rating".
It had previously faced "severe controversies related to the impact of its operations on local communities and discrimination and workforce diversity".
Rio Tinto was at present a permitted security based on the agreed criteria.
And the portfolio’s holding — about $295,000 — accounted for about 1% of the portfolio’s total value, Mr Donnelly said.
The subcommittee reconfirmed yesterday the council’s Sipo would be reviewed on a three-yearly basis.
The broader review concluded the management of the portfolio had been appropriate and sound, he said.
