LME reforms must meet international standards, Global Witness warns
While Global Witness welcomes the London Metal Exchange (LME) commitment to introduce OECD-standard responsible sourcing requirements for its metal brands, it warns that the LME must ensure its members go beyond paper-based compliance activities to meaningfully change and improve supply chains and their impacts.
"Disrupting global trading patterns that link minerals and metals to conflict financing, human rights abuses, environmental degradation and corruption demands change to business behaviours right along the trading chain”, said Global Witness’s campaign leader Sophia Pickles in a statement.
“With metal brands from 61 countries, and used by some of the world’s largest metal producers and traders, the LME has an opportunity to change the global conversation on responsible metal trading”, said Pickles.
EU and US supply chain laws consistent with the internationally recognized OECD due diligence guidance for responsible gold, tin, tantalum and tungsten supply chains are already in place, while Chinese developments towards greener, more transparent mineral supply chains are now on the table.
Investors and asset managers , as well as users of physical metals are increasingly looking for evidence of responsible trading. The LME should respond to market demand for responsibly traded material, and bring the business practices of its members up to scratch, Global Witness asserts.
Global Witness calls on the LME to require its members to publicly report on their individual due diligence practices annually
Global Witness calls on the LME to require its members to publicly report on their individual due diligence practices annually and in line with OECD standards in order to assure the market and their customers of action they are taking throughout supply networks over time.
Global Witness also warns that requiring LME companies to join a responsible sourcing industry scheme as the sole means of guaranteeing good business practice is inadequate.
Industry-wide programs can help with information sharing and create cross-sector efficiencies, but membership of an industry scheme does not guarantee that a company has met its individual responsible sourcing responsibilities in full, as revealed by an OECD study released earlier this year.
"Our research demonstrates that companies attempt to use industry-led responsible sourcing schemes to outsource their individual responsibilities”, said Pickles. “Companies must report individually on their efforts whether a member of a scheme or not”.
For companies, including LME members, whether linked to large-scale or artisanal production, supply chain risks remain a daily reality that responsible companies must identify, address and mitigate. Investors and the market increasingly seek publicly available proof of action taken by companies to mitigate these risks and remediate them where problems arise.
“Ultimately this is about changing what is accepted as business as usual, and ensuring concern for those at the very bottom of mineral supply chains is reflected in all facets of business practice”, Pickles added.