Driving end-customer demand for responsibly sourced aluminium
If responsible production and sourcing are becoming business-critical for many, what steps can the aluminium value chain take toward achieving 100% responsible sourcing globally?
27 June 2022
Customers increasingly seek assurance that the materials they transform and use, including aluminium, are responsibly sourced. In 2020, ASI Aluminium (Performance Standard + CoC Certified) material represented 15% of bauxite production but less than 1% of the aluminium in final products. ASI Impacts Analyst Klaudia Michalska participated in the Euro Mine Expo ’22 earlier this month and shares her observations on the multi-sectoral discussions on these issues.
Sustainability issues for mined materials are complex and need to be tackled systemically and by all stakeholders
Production of aluminium presents a range of sustainability challenges, including climate, circularity, nature and human rights. The issues are interrelated, however, the interests of different stakeholder groups can vary, making it challenging to build consensus on priorities and drive change towards responsible sourcing.
Therefore, it’s crucial to develop processes that convene all interested stakeholders and support equitable participation, so that change pathways are based on a broad understanding of issues and challenges.
ASI is a multi-stakeholder initiative, with balance of voices built into its governance structures (ASI Board, ASI Standards Committee). Having recently conducted a standards revision process that included public consultation (2022 Standards Revision) and consensus-based decision-making, we are moving towards more regular update of Guidance and constant collation of public feedback on the Standards and supporting materials.
Voluntary standards and regulations are tools that are both required to drive change
Regulations are set by governments that, depending on the policy context, can work to set minimum expectations and accelerate change within and across industries and economies. They play a critical role as a part of a broad legal framework.
Voluntary standards have long been a complementary tool for a range of issues, including sustainability. They can reinforce and extend the regulatory landscape, convene multi-stakeholder expertise, and act on specific or evolving issues. Companies can use them to demonstrate their responsible practices and meet regulatory, investor and customer demands. They can provide a common aspiration and direction whether for those with mature sustainability programs and strategies, or those who have just started to understand their supply chain risks and are at the beginning of their sustainability journey.
The complementary relationship between regulation and voluntary standards can create a value implementation role. For example, ASI’s 2022 Standards builds on various inter-governmental initiatives including the COP26 outcomes, and the OECD Due Diligence Guidance on minerals from Conflict-Affected and High-Risk Areas.
Additionally, ASI works on benchmarking and harmonization of external Standards and Certification Schemes which share issues and objectives with the ASI Standards to enhance collaboration and address overlap wherever possible. Currently, ASI recognizes six Standards (ISO 14001: 2015; ISO 45001: 2018; ISO 37001: 2016; ISO 21930: 2017; ISO 14044: 2006; EN 15804) and is also recognized by other six Standards and Schemes (BREEAM, LEED, EcoVadis, ICMM Equivalency Benchmark, Responsible Minerals Initiative – Risk Readiness Assessment (RRA), ITC Standards Map).
Transparency is a key aspect to speed up the process towards 100% responsible sourcing globally
Navigating the complex and evolving standards and regulatory landscape can be challenging, not only for experts but even more so for consumers. Lack of time, expertise, and understanding of issues are just a few of the obstacles customers and end-consumers face while making procurement and purchasing decisions.
Access to simplified and harmonized data such as the carbon footprint of the product, recycled content of the material, etc is of increasing value. Some companies and institutions (involved in different raw materials supply chains) have been exploring this through traceability pilots, using for example blockchain technology that traces material according to defined characteristics. While these technologies are still not widely commercially used, there is interest in their potential to increase transparency and data sharing along value chains, encourage more stakeholders to incorporate sustainability into their business practices and lastly educate end-consumers.
ASI recognizes the importance of supply chain transparency as a means to identify and minimize risks, improve performance and provide information if and where progress has been achieved. Following the ASI’s Standards Revision process and publication of newly updated ASI Documents (May 2022), the ASI Performance Standard places increasing emphasis on transparency and public disclosure on a range of ESG issues through expanded requirements throughout. Examples of two significant challenges that the aluminium sector faces include GHG Emissions and Indigenous Peoples Rights. Entities certified against the revised Standard are now obligated to publicly disclose and independently verify their GHG Emissions and Energy use. To reduce GHG Emissions and help the aluminium sector deliver on the 1.5 degree warming scenario, Entities are required to develop and publicly disclose their GHG Emissions Reduction Pathway (using the IAI 1.5 Degrees Scenario: A Model To Drive Emissions Reduction – the only Aluminium sector-specific pathway available); the GHG Emissions Reduction Plan, and progress against that Plan on an annual basis using Science-Based Targets approach (if applicable to the Scope of the Entity). As for the Indigenous Peoples Rights, Entities which have identified the presence of Indigenous Communities or their lands and resources that might be affected by the Entity’s activities, are required to publicly disclose and implement policies and processes to identify Indigenous Peoples, respect their rights through active and meaningful engagement, and invest in their capacity building.
In the revised Chain of Custody Standard, Entities that ship CoC Material to other CoC Certified Entities, can, in the documents accompanying the shipments, voluntarily include information on the average cradle-to-gate CoC Material carbon footprint, origin of the Material, and recycled content (Pre- and Post-Consumer). This data, even though it is to be shared optionally, if shared by a wider group of companies will enhance material traceability.
End-customer demand for ASI Aluminium produced and transformed under the ASI Performance and Chain of Custody Standards is expected to grow
In 2020, 15% of global Bauxite production was produced under the ASI Performance and Chain of Custody Standards (ASI Chain of Custody Material Flows). ASI’s data shows that each subsequent supply chain stage reduced in a volume of ASI material flowing through, with only a fraction reaching downstream represented by a mere 0,04% of global aluminium final products in 2020.
It is clear that downstream lags upstream in terms of volume of ASI/CoC Material being sourced. Reasons include that upstream supply is much more concentrated and vertically integrated than downstream; that upstream supply needs to build first in order to flow sequentially through; and that lengthy supply chains require time to ‘join the dots’ of Certified Entities for a continuing chain of custody.
In the past year, we have heard from our CoC Certified Members that their direct customers increasingly request information on practices along the supply chain, are interested in purchasing Aluminium coming from CoC Certified sources, and are keen to pass on information proving responsible production and sourcing to their own downstream customers.
In 2021 ASI recorded a strong increase in Post-Casthouse Entities achieving Chain of Custody Certification (11 out of 13 new CoC Certified Entities) which will lead to an increase in reported volumes of CoC Material flowing from upstream producers to downstream users. We are collecting data on the annual CoC Material Flows until the end of June.
ASI’s Chain of Custody flows data is unique among voluntary standards programs in providing a global picture of responsible sourcing growth under ASI. The 2021 data, to be published in due course, will shed light on the evolution of end-customer demand.
To share knowledge, promote and enable learning, ASI offers online training through the educationAl platform and our regular series of ‘45 minutes on…’ webinars, on a variety of topics from across the aluminium industry.