Responsible production has quickly moved up the agenda in recent years, as industry seeks to improve its environmental and social record while awareness of the need for responsible production rises amongst consumers, regulators and investors alike.
Although this trend started before the COVID-19 crisis and its impact on the global economy and supply chains, the current situation is also an opportunity to accelerate and mainstream the shift to more responsible production.
Read more about mining for copper
Global supply chains have become incredibly complex and sophisticated. At the same time, there is a growing awareness of environmental, social and governance (ESG) risks from industry. To manage ESG risks, increased transparency is needed in global supply chains.
Read more about ESG
Consideration of ESG performance and risks is also growing in importance on the financial markets. For example, the S&P 500 ESG Index, which tracks U.S. companies with high ESG ratings, has been outperforming the regular S&P Index over the past year.
In the first four months of 2020, the S&P 500 ESG Index beat the normal Index by 0.6% and over the past year, it saw returns around 3% above the regular Index. The same trend is seen in the MSCI Emerging Markets ESG Index and the AC Asia ESG Leaders Index.
Consumers and regulators are also paying attention to ESG. Topics around due diligence and responsible production are increasingly top priorities in many markets, particularly in Europe.
The European Green Deal sends a massive signal by Brussels that these topics are and will remain a top priority, including raw materials, as shown by the entry into force of the EU Conflict Minerals law in January 2021 as well as the recent proposal of the EU Battery Regulation.
Many industry actors are already moving forward with more responsible practices covering all aspects of ESG. Large companies like Apple and Microsoft have announced their intention to go carbon neutral while initiatives like the We Mean Business Coalition show the wide range of companies making commitments to reach net zero emissions by 2050.
Beyond the ‘E’, Brookfield Renewable Partners (BEP), the world’s biggest renewable asset manager, integrates ESG principles into its investment process through due diligence before deciding to invest and monitoring after decisions have been taken.
Meanwhile, US home improvement retailer Home Depot tracks its progress on a range of ESG criteria annually, including on community engagement, responsible sourcing and emissions.
Industries as a whole recognize the need for a holistic approach to address all three aspects of ESG. The independent validation of responsible production practices is one tool to support the management of these risks and to ensure economic, environmental and societal progress.
One example of this being put into place is the Copper Mark, an assurance framework that promotes responsible copper production practices and contribution of the copper industry to the United Nations Sustainable Development Goals (SDGs).
Developed to enable customers, investors and other stakeholders to make educated decisions on responsible production, the Copper Mark addresses all major ESG topics.
Its requirements cover 32 issue areas such as for example human rights, due diligence, biodiversity, greenhouse gas emissions, renewable energy or gender equality.
Read more articles about renewable energy
The Copper Mark focuses on continuous improvement of responsible production. Sites that have been awarded the Copper Mark must continuously improve to keep it. The criteria themselves are regularly reviewed to ensure they reflect current expectations of what constitutes responsible practices.
Once awarded, the Copper Mark enables companies to communicate about their responsible production practices that have been independently verified and helps these companies meet the expectations by regulators, customers and society. Companies that produce copper responsibly create better environmental and social conditions in the communities in which they operate.
The Copper Mark seeks to link the producers and customers of copper. Downstream or midstream users from other sectors which rely on copper, such as the automotive and tech sectors, can join and become official partners.
Ford, Google, Intel or Wieland are recent examples of companies in the copper value chain who have become Copper Mark Partners, making a commitment to the Copper Mark’s vision and objectives.
Such partners, by showing preference for responsibly produced copper, send an important demand signal to their suppliers to invest in and demonstrate responsible practices.
Read more articles about investment
From the stock market to industry decision makers, it is clear that ESG and responsible value chains are becoming increasingly critical, not only for regulators but for industry and investors.
The current crisis offers a unique opportunity to examine current practices and make a big leap forward to adopt a more sustainable model in line with ambitious ESG principles.
The momentum is there, and industry must continue to move forward, or risk being left behind.
AUTHOR: Michèle Brülhart, Executive Director of the Copper Mark