Welcome to the third edition of the LME’s Sustainability Spotlight newsletter.
The last few months have seen an abundance of new sustainability-focused initiatives, developments and promises, most notably those showcased at the November COP26 meeting in Glasgow. In this issue of the Sustainability Spotlight, we share announcements related to LMEpassport and the LME’s recent collaboration with Metalshub, a leading digital metals trading and price intelligence platform. We also welcome input from Victoria Attwood-Scott from Mercuria, who gives a corporate’s perspective on the navigating the ethical nuances of the sustainable transition.
What’s happening at the LME?
Since the publication of the second Sustainability Spotlight in September, we have seen some significant progress on several of our initiatives.
Launch of LMEpassport sustainability disclosures
On 12 October 2021, at the annual LME Dinner, LME CEO Matthew Chamberlain announced the first sustainability disclosures registered on LMEpassport. We were delighted to see key members of the metals community taking the opportunity to provide greater visibility of their sustainability credentials by using the platform to make disclosures at the company, asset (smelter/refiner), and metal levels. To access the full range of sustainability metrics and certifications uploaded to LMEpassport from the first nine producers to disclose, please click here.
Transparency can help facilitate meaningful progress in important target areas and the LME is pleased to support its listed brands in their vital work to drive the sustainability agenda across all base metals. Consequently, we will be regularly publishing sustainability disclosures registered on LMEpassport on the sustainability disclosures webpage. The LME will also continue to work with producers, standards and certification organisations to further expand disclosures for companies to report against – thereby enhancing transparency across a broad scope of sustainability work undertaken by producers globally.
In Q1 2022, LMEpassport will bring in significant enhancements. These will include a more user-friendly experience when uploading sustainability credentials, and the ability to more clearly highlight whether a disclosure is at a corporate, brand or product level. The success of the platform’s primary functionality as a means of digitising metals’ warehousing documentation (LMEpassport now holds over 900,000 digitised records and some 16,000 electronic Certificates of Analysis) will act as a platform to more widespread sustainability disclosures in the coming months.
LME Sustainability Morning
On 14 October 2021, as part of LME Week we hosted our inaugural “Sustainability Morning”, a virtual showcase highlighting the Exchange’s initiatives designed to support the metals and mining industries in the sustainability transition. Alongside providing a window to the action we have taken in the sustainability space, the LME Sustainability team was joined by experts from across the metals community to discuss base metals’ unique centrality to an array of low-carbon concepts and industries, such as the circular economy and electric vehicle manufacturing. The webinar was free-to-attend and open to all, with the audience stretching well-beyond the metals markets, from NGOs to consumer companies to concerned citizens.
Metalshub spot trading collaboration
On 11 October 2021, the LME announced its partnership with Metalshub to establish a transparent, efficient and liquid spot trading platform and marketplace for base metals. The spot trading initiative works to bolster our sustainability agenda by focusing on providing greater transparency and market access to sustainably produced metals, such as low-carbon aluminium.Find out more about the Metalshub collaboration, and how it ties in with the LME’s sustainability strategy
As a reminder, the LME has translated the responsible sourcing overview documents into a number of languages (Français, Español, Italiano, Português, Pусский, 日本語,中文). We have also recently released translations of the Red Flag Assessment template in these languages as well. Although we require all documentation to be sent into the LME in English, we hope that these resources help your understanding of the programme.
The LME will release further guidance for Track B audits before the end of the year and details about the submission process for producers in early 2022.
Since our last issue, we have welcomed a number of new standards, ISO equivalencies, and auditors to our responsible sourcing programme at the LME. The tables below indicate those newly added to their respective roles:
|Recognised alignment-assessed standards* (Track A)||
Joint Due Diligence Standard assessed with the:
|LME approved auditing companies|
|ISO 14001 and ISO 45001 / OHSAS 18001 equivalent certification programmes||Mining Association of Canada - Towards Sustainable Mining (MAC TSM)|
*conditional upon implementation alignment assessment (see LME Policy 5.2 (i))
December’s market insight – A Responsible Transition
This issue’s market insight is from Mercuria’s Victoria Attwood Scott.
Since its founding in 2004, Mercuria has become one of the premier global energy and commodities trading companies. Having begun primarily as an oil trader, Mercuria is now also a leading player in base metals trading and enjoys an established presence at the LME. Not only this, but with a pledge to shift more than half of its investments to energy transition projects over the next five years, Mercuria shares the Exchange’s sustainability focus.
Victoria Attwood Scott is the Global Head of Compliance at Mercuria Energy Trading SA, Victoria joined Mercuria in 2013 and is based in Geneva, Switzerland. Prior to joining Mercuria, Victoria worked for Goldman Sachs in the UK where she was a Managing Director and Global Head of Commodities Compliance. Victoria has previously been a compliance officer at Investec and Barclays Capital. Victoria started her career with Barclays working on the London International Financial Futures and Option Exchange (LIFFE). Victoria is a member of the LME User Committee.
A Responsible Transition
The need to change
The world is changing, we can argue about whether it is changing fast enough and many of us will have views on how the transition should and should not happen, but we all know for sure that the world and we must change! As we move away from traditional fuel sources towards new greener fuel sources there are many exciting prospects and many challenges that will need to be overcome. You only have to watch one of Attenborough’s documentaries to understand what a pivotal point we are at if we are to save the world in time, and events like the recent COP26 summit in Glasgow are demonstrative of the importance and urgency of the issue. Given this, the transition has now become the priority at every board table. The younger generation are passionate about the transition and shareholders are demanding change to business strategies.
The role of corporations
For corporates there are many things to consider when figuring out their Agenda 2030 and future corporate strategy. What will their customers need in the future? How do they continue to service their clients if their needs don’t fit the new “acceptable” world? How will financing change and at what cost? What will my market look like? And most importantly, how do I move with the evolution? Corporates are looking at how they will achieve high ethical standards in sustainability, traceability and social governance throughout their activities. With change comes opportunity and there is real potential for those who embrace the change and stay at the forefront of it.
The move away from fossil fuels requires the development of new transition technologies to transform industry, to heat our homes and power our cars. The problem with renewable energies is the intermittency, we cannot choose when the sun shines or when the wind blows! The solution is storage, provided largely by numbers of enormous batteries to help to regulate the distribution of power. The battery market is anticipated to be worth US$100 billion by 2025. Ironically however, if we don’t convert in the right way the move towards cleaner fuels could result in unintended harm to our environment and human beings. Cobalt, a key component in battery technology, is well known for the exploitive conditions under which it is mined by adults and children. It is widely reported that forced labor, child labor, debt bondage and sexual assault are serious realities associated with cobalt mining, particularly in the DRC. Amnesty International has documented violations of the human rights of indigenous people living near lithium (a key battery component) mines, communities are not given enough information about how damaging mining activities can be to their water sources.
Increasing mandatory due diligence
Supply chain due diligence by market participants is therefore key when sourcing these new technology metals. Regulators play their part in forcing high standards of due diligence to ensure that companies and their financiers are scrutinising the entities from whom they are sourcing and we are seeing lots of movements in this regard. In Europe, the Non-Financial Reporting Directive (NFRD) which requires large public interest companies with more than 500 employees to disclose environmental, social and employee related matters will be replaced by the Corporate Sustainability Reporting Directive (CSRD), which will extend the obligation to more entities, introduce more detailed reporting requirements and require audits of reported information. In Switzerland, following an unsuccessful vote on the proposed Responsible Business Initiative, the indirect Counter-Proposal will automatically enter into force in the coming months. The Swiss Criminal Code and the Swiss Code of Obligations will impose extensive non-financial reporting obligations on large public interest companies and financial institutions particularly in relation to environmental, social and employment related matters, respect for human rights as well as the fight against corruption. Additionally, due diligence obligations will be imposed on companies. For some companies this type of due diligence will already be in place to some extent, for others it may require new processes. In order for these human rights violations to improve it is imperative that we work together as stakeholders. Governments, NGOs, financiers and the private sector can be so much more effective when they collaborate. The more we are able to force high ethical standards to be necessary for a company’s success, closing the opportunities for less scrupulous companies to frustrate ethical improvements, the faster these situations will improve. The LME has been a market leader in this regard and taken a bold step forward with its responsible sourcing requirements, which we welcome as a strong step towards improving conditions for many miners.
A balanced transition
At this time of innovation and development we should also be taking the time to really think about the implications of how we transition to a greener world and ensure that we move forward in a way that improves not just the climate but also the social issues which need addressing. We must be cautious not to exasperate the human rights violations in certain industries as both climate and human rights need to go hand in hand. Technology and transparency can help in the fight against these human rights abuses. It is clear that the necessary energy transition is dependent on “transition metals” and so the need to source them is a very real one. Companies along with other shareholders therefore need to work to address these issues together with their suppliers and partners.
What’s coming up at the LME and how can I get involved?
Upcoming events and educational resources
Earlier this year, the LME launched its brand new website which features a sustainability homepage
Before the new year, the LME will provide audit guidance for Track B of the responsible sourcing policy
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