Global Witness today joins a coalition of 16 NGOs to respond to the London Metal Exchange's responsible sourcing roadmap in an open letter, as the consultation period comes to a close.
Richard Kent, supply chain investigator and campaigner at Global Witness said:
“Global Witness welcomes the progress and leadership of the LME in introducing Responsible Sourcing guidelines for LME-listed brands, particularly the requirements for brands to publicly report on financial crime and corruption risks in line with EITI and OECD standards, and on named individuals directly responsible for supply chain due diligence within their supplier networks. These are important steps for brands to demonstrate they are taking the impacts of their business seriously.
“However, a few crucial weaknesses remain in the LME’s responsible sourcing roadmap that hinder full and meaningful disclosure.”
Need for environmental and climate disclosure
“Crucially, the LME’s responsible sourcing rules and guidelines do not take into account the serious environmental and climate risks associated with their brand’s supply chains. This is a glaring omission and a missed opportunity for the LME and their brands to take a lead within the metals and mining sector in acknowledging and addressing the huge environmental impact of the mining industry. This includes both environmental damage to biodiversity and fresh water supplies, as well as the climate impacts caused by excessive emissions in production and manufacturing, which conflict with countries’ carbon reduction targets and the global Paris Agreement’s goal to limit global warming to 1.5C above pre-industrial levels.”
“Moreover, the LME’s brands cannot fully address and assess the human rights risks of their supply chains without also looking at the environmental risks. The work of Global Witness and other NGOs has shown time and time again that those on the frontline of the battle to fight climate breakdown, preserve ecosystems and protect their land from mining and other projects risk being criminalised, attacked and killed. Human rights violations and environmental abuses are therefore often intertwined and the LME must not ignore these links in its responsible sourcing plans.”
“The LME is the largest Exchange for metals’ futures contracts in the world. As countries shift toward low carbon economies and electric vehicle fleets that rely heavily on these same base and battery metals, like copper, cobalt, zinc, nickel and lithium, the LME must use its leverage to ensure that these metals are produced and traded in a way that respects people and planet. We cannot allow the path to a zero carbon economy to come at the cost of lives in producing and manufacturing countries and further environmental degradation in mining centres.”
“The LME must introduce environmental and climate disclosure if its listed brands want to continue to attract institutional investors. It is clear that environmental, social, and governance (ESG) risks and human rights are now firmly on the agenda of institutional investors, and non-financial disclosure is increasingly sought. As investors adapt to the forthcoming EU regulation on ESG reporting, the LME should facilitate the move toward greater corporate liability and responsibility, and ensure that producers and listed brands move in this direction themselves, before the institutional investor community are legally obliged to divest.”
“We also caution the LME against over-reliance on industry schemes as a means of demonstrating responsible business. Our research, and the findings of a 2018 OECD study, demonstrate that participation in an industry scheme does not guarantee that an entity is undertaking responsible sourcing in practice. Industry schemes can serve as a veneer by which companies purportedly demonstrate “compliance”, and treat ESG and human rights due diligence as a box-ticking exercise, rather than acting on their responsibility to properly scrutinise supplier efforts.”
”The LME’s responsible sourcing rules will only be effective if they ensure companies adequately disclose ESG and complex human rights risks and their plans to mitigate these risks. Companies must be liable for the degree to which they implement their social and non-financial responsibilities in practice, and not simply on paper.”
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Press releaseGlobal Witness welcomes responsible sourcing rules for LME brands and particularly requirements for brands to publicly report on financial crime and corruption risks in line with EITI and OECD standards, and on named individuals directly responsible for supply chain due diligence within their supplier networks.
Press releaseThe London Metal Exchange (LME) Responsible Sourcing proposal in its current form fails to ensure that the operations and trading practises of LME members will meet international responsible sourcing standards, as laid out by the OECD Guidance.
Global Witness statement for London Bullion Market Association (LBMA) and Responsible Minerals Initiative (RMI) annual conferencesThe LBMA and RMI must use their annual gatherings to ensure that member smelters, refiners and traders prioritize improving responsible sourcing practices to bring them in line with international responsible sourcing standards in practice, not just on paper.