LME announces target to increase transparency around sustainability

New York — The London Metal Exchange has launched a discussion paper in a bid to drive forward its sustainability agenda, including increased transparency aimed at tackling challenges faced by the metals and mining industries, as the world moves to a circular economy.

The LME said Aug. 13 that it will be launching new products to support the recycling/scrap and electric vehicle industries, as society pushes ahead with sustainability plans.

New contracts will include North American used aluminium beverage can and Taiwan and India scrap contracts.

One of the main focuses will be the introduction of an LMEpassport, a digital register that would enables voluntary market-wide sustainable aluminium labelling. This would allow metal to be tracked and monitored along the supply chain, and is another step in the right direction for the labelling and production of "green aluminium."

While different metal industries face different environmental challenges, particular focus has been given to aluminium, largely due to its energy intensive smelting process. Aluminium is, however, pivotal to the sustainable transition due to its use in light-weighting and its recyclability.

There are also plans to instigate a spot trading platform for price discovery and trading of low carbon aluminium. More and more investors are looking for increased Environmental, Social and Governance benchmarking, in order to better assist their use of funds.

LME Chief Executive Matthew Chamberlain said: "Metals are vital to our transition to a more sustainable future – and this paper sets out our vision to work collaboratively with industry to maximise the potential of metals to power this transition."

The CEO added that the exchange already provides access to contracts that are essential both to burgeoning industries such as EVs and to infrastructure supporting the circular economy, "but we need to do more, both in building out these areas and in supporting the development of the sustainable production of metals."

In the discussion paper the LME laid out proposed ways forward to make metals the cornerstone of a sustainable future, following three core principles: maintaining a broad scope; supporting voluntary disclosure of data; and providing the necessary tools for change.

"These principles reflect the LME's belief that the market has not yet fully coalesced around a centralised set of demands or priorities in respect of sustainability. As a result, the LME aims to build consensus through market-led and voluntary transparency, providing a number of tools and services to facilitate solutions related to sustainability in its most expansive sense," according to a statement to the market.

Continued drive for transparency

In October, the exchange said it wants to increase sourcing transparency for its listed brands with a set of requirements it hopes will set a level playing field for both small-scale and large-tier miners.

The LME's requirements, which will apply to all its listed brands, are based on four core principles: the combination of transparency and standards; non-discrimination between large-scale mining (LSM) and artisanal/small-scale mining (ASM); adherence to well-established work in the sector; and a pragmatic and clear process, it added.

Georgina Hallett, the LME's chief sustainability officer, said Aug. 13: "We recognise that a lot of valuable work has already been done by individual companies, industry associations, standards bodies and NGOs, and -- as with our responsible sourcing initiative -- we believe it's vital to work collaboratively to further enable that work."

Hallett added that "we also acknowledge that ‎there are different views on exactly how to manage the transition to a low carbon economy, which is why we are committed to providing a range of tools and services to facilitate different approaches – while also maintaining optionality."