The LME unveiled its responsible sourcing requirements on Friday after picking through feedback to a consultation document it put out in April. The LME offers companies three routes to OECD compliance, details on which can be found here. LME will publish an initial set of anonymous summary statistics at the end of December 2022, but companies will not be identified by name until the end of 2026.
"We are really conscious that there's a lot of information in those [assessment] templates," Georgina Hallett, chief of staff at the LME said at an event hosted by the International Copper Association on Friday ahead of LME Week.
"The metal market is still relatively new to this world, and we don't want brands to get punished for this kind of transparency by headlines that say ‘X brand has children in its supply chain or has found red flags, therefore it is a bad brand."
"Nothing is going to improve in our supply chain if we aren't honest and open about what we find, and you can't fix a red flag or mitigate those risks unless you find them in the first place," said Hallett.
The LME has attracted some criticism for allowing artisanal mining under the new requirements, but Hallett said it was made clear to the LME that "simply banning artisanal mining - while it might be easier in the short term - doesn't actually solve anything in those places where artisanal mining isn't given the proper support it needs. So we wanted to make sure artisanal mining was part of a legitimate supply chain," she said.
The LME is the first exchange in the world to lay out such requirements.
James Nicholson, head of corporate responsibility at trading house Trafigura, said the requirements were "an incredibly positive step forward".
"It is what the industry required. It shows an industry coming of age as we've discussed. There is a proliferation of standards out there and the possibility of consolidation under an exchange as important as this one [the LME] is a really positive step because frankly there are few days that pass where I'm not getting emails from some responsible XYZ association saying you should be a part of this or that. There is a real need for simplification."
Meanwhile the WEF has said it is partnering with seven mining and metals companies to develop blockchain solutions to accelerate the responsible sourcing process. Antofagasta Minerals, Eurasian Resources Group Sàrl, Glencore, Klöckner & Co, Minsur SA, Tata Steel Limited, Anglo American/De Beers (Tracr), are founding members of the initiative.
"The mining and metals blockchain initiative will pool resources and cost, increase speed-to-market and improve industry-wide trust that cannot be achieved by acting individually. It aims to be a neutral enabler for the industry, addressing the lack of standardisation and improving efficiency," said the WEF in a statement.
"The intention is to send out a signal of inclusivity and collaboration across the industry. The group will look to develop joint proof-of-concepts for an inclusive blockchain platform. Over time, this could help the industry collectively increase transparency, efficiency or improve reporting of carbon emissions."
Although clearly a step in the right direction, specifics on what will be monitored, or how, were vague.
"Key areas of collaboration and development could include carbon emissions tracking and supply chain transparency," said WEF.