Welcome to October 2024’s edition of the Sustainability Spotlight.
In this issue, we are excited to share the outcomes of the LME’s Carbon Border Adjustment Mechanism (CBAM) consultation and sustainability discussion paper, as well as the latest on responsible sourcing and LMEpassport enhancements.
We will also recap LME Week 2024, where sustainability was a central theme. Finally, guest writer Sebastian Leape from Natcap offers insights on biodiversity and nature-positive outcomes in the metals and mining sector.
CBAM consultation and sustainability discussion paper – LME response
In May 2024, the LME released a consultation on the proposed integration of the EU CBAM requirements into the LME rules to support the aluminium market in implementing this environmental policy.
At the same time, we issued a discussion paper to further develop our existing sustainability agenda, seeking views on driving forward initiatives that underpin the global transition to a sustainable economy.
We are grateful to everyone who responded to the consultation paper, which closed with 33 responses on 14 June 2024. The responses showed overall support for the LME's proposals to mandate emissions reporting, in line with CBAM requirements. Feedback highlighted the importance of transparency and sustainability in the metals industry, and the need for the LME to facilitate communication between producers and importers.
As a result, we will introduce mandatory emissions reporting for aluminium producers in line with the EU CBAM methodology. Alongside this, we will provide the means for producers to voluntarily report their emissions in line with the International Aluminium Institute’s Carbon Footprint Guidance.
To read about the decisions taken on other aspects of the discussion paper, including sustainability-related pricing, increasing mandatory data on LMEpassport, and more, you can read the full response paper here (opens PDF), along with a summary on our website.
Visit the CBAM emissions reporting page
LME Week 2024
LME Week has come to an end for another year, and what an eventful week it was! Opening as always with the LME Metals Seminar, Bonnie Y Chan, CEO of HKEX, launched the week with her welcome speech, including a focus on the importance of green technologies and the central role the metals industry has to play in the green transition.
An early highlight was the fireside chat between LME CEO Matthew Chamberlain and Jonathan Price, President and CEO of Teck Resources (which you can watch here), where sustainability again took centre stage. Their discussion covered responsible sourcing, LMEpassport, and our decision to integrate CBAM requirements into our rules, which was announced earlier that day.
The panel on the future of the metals value chain, led by Georgina Hallett, the LME’s Chief Sustainability Officer and Head of Physical Markets, explored the evolving landscape of the metals value chain. Richard Morgan, Head of Government and International Relations at Anglo American, highlighted the global forces reshaping the sector. Meanwhile, Ella Cullen, Co-founder & CMO of Minespider, emphasised the role of digitisation in the supply chain, and Christophe Allain, Group Portfolio Vice President for Non-Ferrous Metals at Nexans, discussed how businesses are adapting to geopolitical shifts and climate change.
For the third consecutive year, copper was voted as the metal with the most upside potential in the Metals Debate. However, a key theme of the day highlighted the disconnect between copper’s crucial role in a sustainable future and the current shortfall in meeting the forecasted demand driven by the energy transition. From a sustainability perspective, feedback indicated that challenges in allocation methodologies continue to hinder the accurate calculation of product-level carbon footprints across the copper family of metals.
Two standout sessions closed the seminar, both with a strong focus on sustainability. Christian Mildner, Head of Corporate Sales at LME, explored the future of metals recycling alongside Susie Burrage OBE, President of BIR and BMRA, who outlined both the challenges and opportunities in recycling. Following this, Barry Corbett, Head of Buy-Side at the LME, and his panellists discussed how funds, which have been underweight in metals for over a decade, are now making material investments in the energy transition metals.
You can watch all the LME Metals Seminar sessions on our videos and presentations page.
The rest of the week was packed with events including a reception for LME-listed brand producers, a performance from the cast of the Lion King at the LME Dinner, and the LME’s sustainability roundtable with over 30 representatives from sustainability standards and metals associations. Thank you to everyone who contributed to the ongoing sustainability conversation; it is clear that sustainability remains at the forefront of the industry’s future.
Responsible sourcing
We are pleased to share the latest updates from the responsible sourcing programme, featuring the latest track selection statistics, responsible sourcing programme overview, and new work underway. You can read the full update here (opens PDF).
Increased transparency of Red Flag Assessments
The LME is advancing its transparency requirements for producers using Track C to implement the OECD Guidance. Red flag assessment templates (RFAs) submitted in 2024 will be published anonymously, offering the option of full attribution if the brand producers choose to do so.
Phased transparency
The Track C public disclosure timeline, as set out in the LME responsible sourcing policy:
- Summary statistics: 2021-2022 reporting periods
- Anonymised versions of per-brand RFA: 2023-2024 reporting periods
- Attributed versions of per-brand RFA: 2026 reporting period and onwards
To see existing Track B audit reports, please visit LMEpassport.
A new milestone for the Joint Due Diligence Standard
The LME is pleased to share that the Joint Due Diligence Standard for copper, lead, molybdenum, nickel, and zinc – assessed though the Copper Mark Assurance Process – is now fully aligned with the OECD Mineral Guidance after a rigorous third-party OECD Alignment Assessment. This milestone means that The Copper Mark is the first Track A standard to obtain "approved" status.
For more information on alignment assessment progress, see here.
LMEpassport
In July 2024, we released further updates to LMEpassport. Users are now automatically notified when their disclosures are about to expire, prompting them to upload a new one. These notifications can be easily customised with a choice of two weeks, one month or three months prior to expiry.
We will also be making each brand’s responsible sourcing compliance track public on LMEpassport by Q2 2025, as announced in our recent response paper. This enhanced transparency will support the due diligence processes of other stakeholders in the value chain.
We would also like to remind producers to upload your company logo and update any outdated information on your producer profile, including your annual sustainability report.
Green nickel: the importance of harmonised carbon assessments
On Wednesday 5 June 2024 experts from the LME, Metalshub, and the Nickel Institute explored the topic of "green” nickel and how sustainability-related pricing differentials can be established. The panellists discussed low carbon nickel assessment methodologies and price discovery mechanisms and took questions from the audience.
You can watch the webinar here.
Market insight: Nature’s Place in Mining
Sebastian Leape, CEO, Natcap
Sebastian leads the Natcap team on their mission to accelerate the nature positive transition by integrating nature intelligence into business decision making.
Over the last 10 years, his career has been focused on trying to make our economic system more sustainable.
Sebastian worked as an Associate Partner at McKinsey, helping businesses and governments define and embed climate and nature strategies into their operations. He has also been a policy advisor, teacher, and researcher.
Natcap is a software and advisory company that helps organisations embed nature more broadly into their decision making. We help companies tackle TNFD reporting, but also empower them to understand and interpret the specific nature-related elements of their own business. This allows companies to future-proof against nature-related risks; capture nature-related business opportunities; and meet mandatory regulatory requirements with confidence.
We primarily serve large corporates who already have or will soon have regulatory requirements to report on their nature impacts and dependencies.
The metals and mining industries have a long history of measuring and reporting on biodiversity, and that continues today: the International Council on Mining and Metals recently put forward a position statement committing to driving a nature-positive future. But stakeholder expectations are changing and what has worked in the past won’t work in the future.
Regulators and investors are increasingly expecting companies to move beyond site level impact assessments and develop a company-wide understanding of the nature related risks and opportunities faced across the business.
These new expectations are being driven by global momentum on corporate action on nature, from the United Nations Biodiversity COP setting ambitious targets for nature conservation, to the European Union’s new Corporate Sustainability Reporting Directive, which came into effect earlier this year. Perhaps most significant of all is the increasing uptake of the Taskforce for Nature-related Financial Disclosures (TNFD) recommendations, which is increasingly underpinning all new nature related reporting and measurement initiatives.
TNFD follows in the footsteps of the Taskforce for Climate-related Financial Disclosures (TCFD) in recommending companies disclose their nature related governance, strategy, risk management and target setting. They have just released sector specific guidance to help the metals and mining industry specifically. This offers a list of primary and secondary disclosure indicators and metrics; as well as approaches to help companies identify potentially material risks and opportunities – all tailored for the sector.
So what are these risks? Nature risks can have a direct and negative impact on both the metals and mining industries: water use, ecosystem degradation, and pollution all pose very real regulatory, reputational and physical risks to the sector. Equally, however, maintaining and enhancing biodiversity can create opportunities to increase the resilience of supply chains and secure price premiums for nature positive minerals.
Measuring, reporting and acting on nature risk at the company level is a new challenge for many in the metals and mining industry. While plenty of data may lie buried in environmental impact assessments at the site level, bringing this up to company level insights is technically complex and expensive. Companies often struggle to understand what should be measured, where to find the right data, and how to interpret it to support business decisions.
Ultimately, the long-term prospects of the metals and mining industries will depend on resilient ecosystems and continued support for natural resources. And that’s exactly why these sectors can – and should – be at the vanguard of the nature-positive future.
If you’re interested in taking the first step in exploring your own nature-related risks and opportunities, please do get in touch with Natcap.
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