Traditional Graphite Production is Bad News for ESG Compliance
November 2023 Benchmark Minerals
Only 6% of global graphite production this year will come from companies assessed as having “Good” or “Industry Leading” environmental, social and governance (ESG) practices, according to new research from Benchmark.
“Industry Leading” ESG practices data from: Benchmark’s new Graphite ESG Report
For Natural graphite, no actively producing operations were found to demonstrate “Good” or “Industry Leading” ESG practices and disclosures.
Synthetic graphite, often flagged for its carbon intensive production process, fared marginally better.
Benchmark’s analysis identifies another six existing synthetic graphite producers as having “Good Practice” out of 134 total companies assessed. These companies account for close to 6% of the combined natural and synthetic graphite output for 2023 according to Benchmark’s Graphite Forecasts. The findings underline that graphite sourcing risks stretch far beyond supply diversification. Global dependence on Chinese supply has exposed consumers to sustainability risks that have become inherent in the country’s domestic supply chains. This production has yet to receive the analysis or oversight needed to meet increasing Western consumer standards.
For both natural and synthetic graphite, there are no companies based in China with sustainability index scores that would place them in the “Good” or “Industry Leading” categories. Benchmark Source previously reported that three-quarters of the graphite anode supply chain is situated in China.
“There is still a lack of ESG awareness in the current graphite industry and suppliers are not prepared for sustainability criteria being increasingly applied to Western supply chains, now and in the near future,” Olivia Lin, an analyst at Benchmark, said.
Benchmark Graphite Sustainability Index
Benchmark’s new Graphite Sustainability Index scores companies on a scale of 1-100 based on topics deemed to be of material importance for ESG for the graphite industry. Benchmark assesses a set of 79 metrics including having policies for net zero, resettlement, and gender equality. “This is a multi-stakeholder led process that identifies the material topics to be included,” Charlotte Selvey Miller, head of sustainability at Benchmark, said.
A score of over 70 deems a company “Industry Leading” and a score of over 55 deems a company as having “Good practice”. “To be classified as “Industry Leading” shows that the company is progressive against industry peers in their efforts towards ESG policies, disclosures and transparency,” Selvey Miller said. “When a company is classified in the Index as “Good Practice”, we have noticed that companies are working towards ESG transparency and are making the right and more conscious steps to becoming a responsible company.”
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