Hugo Brodie - London Metal Exchange responsible sourcing
Updated: May 31, 2020
For over 140 years, the LME has set requirements for metallurgical standards and shapes (e.g. cathode or ingot) when approving brands that can be used to deliver against LME contracts (and consequently, the brands that make up the LME price). It is only more recently that the market demand for responsible sourced metal has meant that we have the remit to extend those requirements to include conditions for how that metal is sourced. We believe we have a key role in facilitating the adoption of responsible sourcing principles, and that we can no longer accept the possibility that our users be placed in a position where they can take delivery of metal from one of our listed warehouses that does not meet those principles. Furthermore, we need to ensure that the LME price reflects the value of responsibly sourced metal, and is not artificially depressed by metal which is not.
To achieve this, we have grounded our approach in the OECD’s Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (“OECD Guidance”) as we believe this is the most globally accepted approach to responsible sourcing. Our responsible sourcing requirements will leverage the OECD-aligned metals standards already available (or in development) to conduct due diligence on brands that operate in conflict affected and high-risk areas (“CAHRAs”). It is our aim that in the not-too-distant future we will be in the position where all our LME registered brands will have undertaken appropriate responsible sourcing work corresponding to the OECD framework for risk based due diligence.
On the environmental side, we are also introducing requirements for all LME-listed brands to hold a valid certificate for ISO 14001 (or equivalent), to ensure that environmental management systems are firmly embedded in the operations of all brand-producing companies. As the sustainability agenda continues to develop we will keep working with the industry to see how the LME can best reflect evolving market demands, including possibilities for low carbon aluminium, or sustainability concerns to be incorporated within the LME’s broader responsible sourcing requirements.
Finally, we firmly believe our industry should contribute to development challenges in a proactive manner. As such, the LME Board has allocated US$2 million, funded by market enforcement proceeds, to charitable initiatives in the responsible sourcing sector.
We are taking action because the value of our market is based on providing metal which meets globally-accepted standards for responsible sourcing, and because the metals sector looks to us to provide leadership on these important topics; mostly, however, we are taking action because we believe it is the right thing to do, and we are proud to serve a market that demands nothing less.
Hugo works within the CEO office at the London Metal Exchange with a focus on responsible sourcing, warehouse reform and new strategic projects. Prior to this he was driving the launch of warehousing initiatives and new product launches undertaken by the Exchange. Hugo joined the LME in September 2015, having previously worked in Integrated Supply & Trading at BP in both trading and risk roles.
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