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UK: Pressure from investors and consumers pushes London Metal Exchange to introduce new responsible sourcing rules

Author: Neil Hume, Financial Times, Published on: 23 April 2019

"LME to shake up rules on responsibly sourced metals", 22 April 2019.

The London Metal Exchange will only allow responsibly sourced metals to be traded from 2022, as rising demand from consumers and investors for sustainable products prompts one of the biggest shake-ups in the organisation’s history...The plans, which will be announced on Tuesday, mark a significant departure from the exchange’s history in which metallurgical standards have determined the brands of metals eligible to trade on the LME, the world’s biggest marketplace for the likes of copper, zinc and aluminium.

However, responsible sourcing has come into focus after it emerged in 2017 that some of the cobalt — a key material in the batteries of smartphones and electric vehicles — traded on the LME could have been mined by children in the Democratic Republic of Congo...

The overhaul of the rules will require all producers to take a “Red Flag” assessment, and those brands considered by the LME to be riskiest must then adopt an OECD-aligned responsible sourcing standard by the end of 2022. If they fail to, they risk being delisted from the exchange...Initial proposals released by the LME in October were sharply criticised by more than a dozen campaign groups and non-governmental organisations, which called for more achievable timelines, an assessment of corruption risks and a transparency requirement over the sourcing of metals...To ensure corruption and bribery risks are captured by the new rules, producers will have to confirm whether they “facilitate disclosure of financial crime and corruption risks” under the Extractive Industries Transparency Initiative...However, the LME has stopped short of adopting broader UN principles on human rights and OECD guidelines for multinational enterprises...

For companies such as Rio Tinto and Rusal, which produce low-carbon aluminium...the LME was looking at ways those brands could be identified in its system...

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Related companies: Rio Tinto RUSAL