LME plans to introduce responsible sourcing standards

The London Metal Exchange (LME) plans to introduce responsible sourcing principles for all its listed metal brands by 2020, in line with existing requirements on transparency, environmental, health and safety standards.

The LME said today that it launched a formal, market-wide consultation on proposed rules for the application of responsible sourcing principles, which build on OECD guidance.

Many industry associations and companies have been leading global initiatives to steer consumers towards responsible sourcing from non-conflict zones, or to provide supply chain clarity for minerals from conflict-affected, high-risk countries.

The LME's move follows a report published in October that warned the exchange could delist certain cobalt brands by the third quarter of 2019 because of ethical sourcing concerns.

The proposed rules will require all LME-listed brands to undertake a "red flag assessment" based on OECD guidance by the end of 2020. This assessment provides a consistent and widely accepted model to identify metal brands that may require higher focus because of the specific nature of their operations, the non-ferrous metal trading exchange said.

If the assessment demonstrates potential problems with regard to responsible sourcing, the brand will be classified as "higher focus", and will need to be audited as compliant with an OECD-aligned standard by the end of 2022.

LME aims to publish fully attributed red flag assessments for all its brands by the end of 2024, while respecting the requirements of commercial confidentiality.

The consultation is expected to run until 30 June 2019.