The London Metal Exchange today announced it is launching a formal consultation on proposed rules for “the application of responsible sourcing principles to all LME-listed brands.”
“Our comprehensive market engagement exercise has revealed strong support for the LME taking action on this important topic,” LME CEO Matthew Chamberlain said. “The LME’s role is now to appropriately balance the differing views of market stakeholders when implementing our requirements – and we are pleased to have been able to do so in today’s proposals. For example, based on the constructive feedback of civil society organisations, we have enhanced our transparency requirements, and at the same time, we have respected the views of producers who have called for more achievable timelines and a clearly-defined reporting process.”
The proposed rules call for every LME-listed brand to undertake a Red Flag Assessment — which is based on guidance from the Organization for Economic Co-operation and Development (OECD) — by the end of 2020. Brands flagged for potential sourcing issues would then be classified as a “higher-focus brand” and will be audited by the end of 2022.
More attention has been given to ethical sourcing in recent years. For example, much attention has been given to the sometimes murky cobalt supply chain and labor conditions in the Democratic Republic of the Congo (where a majority of the world’s cobalt is mined).
“Global consumers rightly demand action on responsible sourcing – and our industry must listen,” Chamberlain said. “The LME is taking action because it is the right thing to do, but also because the value of our market is based on providing metal which is acceptable to those consumers, and because the metals sector looks to us to provide leadership on these important topics. Our role will necessarily be to forge a consensus between the potentially divergent views of various stakeholders – and this role is never popular. Nevertheless, we are committed to playing our part in this movement.”
In October, the LME released a position paper related to responsible metals sourcing. That paper outlined a timeline for compliance, including specific standards for cobalt and tin.
“For cobalt and tin, chosen standards must be identified by the fourth quarter of 2019 and full compliance with standards will be required by the end of 2020,” the LME announced in October. “For all other higher-focus brands, standards must be identified by the fourth quarter of 2020 with compliance by the end of 2021. Non-compliant brands will be eligible for delisting once the relevant deadlines have been passed.”
The consultation is scheduled to end June 30, 2019. More information about the LME’s ethical sourcing proposals can be found on its website.