Responsible Extractives Trading study
Public comment period: feedback and response
The Draft Methodology of the Responsible Extractives Trading study was published in five languages for a four-week period of public comment, which closed end-July 2020. RMF wishes to thank all who contributed comments and recommendations, all of which were reviewed and considered in the finalisation of the methodology. The outcome of this public consultation is summarised here.
Background to the RET study
Commodity trading plays an important role in organising the global flows of outputs from the extractive industries (minerals, metals, oil and gas). Companies that trade in these hard commodities operate globally, and many of them are private companies or private wholly-owned subsidiaries of public companies. Depending on jurisdiction and company structure, in many cases they are not subject to mandatory disclosure requirements on issues such as human rights due diligence, environmental due diligence, payments to governments, and other public interest issues. A few leading companies are recognising the need to be more transparent about ESG issues related to their trading activities and to demonstrate due diligence on issues such as human rights and the environment.
With growing awareness of the importance of responsible value chains, as evidenced by the emerging expectation for accountable financial flows and non-financial disclosure, there is increasing recognition among governments, customers and consumers of the need for more transparency and traceability.
Although some guidance applicable to trading activities has been emerging of late, (for example OECD, EITI and Swiss guidance on human rights due diligence, and related initiatives such as the responsible sourcing requirements of the London Metals Exchange, there is no formal, independent measurement tool to assess the policies and practices of companies in the extractives trading sector on ESG issues.
Objectives of the study
Against this background, the Responsible Mining Foundation is undertaking a Responsible Extractives Trading study with the aim to:
• Support awareness raising of ESG issues in extractives value chains;
• Support capacity building and know-how for companies, regulators and others;
• Expand the effectiveness of existing international guidance on responsible value chains; and
• Increase understanding of how to support supply chain and downstream customers on ESG issues.
The study sets out to achieve these aims through:
• Development of a simple, evidence-based measurement tool for the purpose of assessing, at corporate-level and on the basis of publicly available information, policies and practices of companies that trade in extractives, with regards to ESG issues; and
• Piloting the measurement tool by applying it to a selected portfolio of companies that together cover a sufficiently representative geographical footprint and share in the global trade of hard commodities.
Timeframe of the study
Following the public comment period, RMF will finalise the methodology of the study and commence initial public domain data-gathering of evidence related to the indicators and metric questions. Subsequently, there will be a company review and reporting period, followed by final analysis and scoring. The results of the study will be published in early 2021.
- Swiss Confederation Federal Department of Foreign Affairs and State Secretariat for Economic Affairs (2018); OECD (2016a); EITI (2019b). ↩