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The challenge

Global commodity trading is an essential, but poorly understood, part of the global economy. Trafigura wants to hear what key stakeholders expect of us as well as dispel some misconceptions about our industry.

 

Our approach

Multi-Stakeholder Forums are an integral part of Trafigura’s approach to transparency. These extended meetings provide the opportunity to engage at length with stakeholders. The more we understand what our stakeholders regard as important the more accurately we can identify and prioritise salient issues. Meetings are held under the Chatham House Rule to encourage frank and open discussions.

In 2018, Trafigura hosted its fourth multi-stakeholder forum (MSF) in Singapore. Senior representatives from government, multilateral financial institutions, non-governmental organisations, counterparts, banks and investors attended along with key personnel from Trafigura. The session was moderated by an independent consultant.

Previous MSFs have been held in Geneva in 2016, and in Barrancabermeja (Colombia) and Johannesburg in 2017. On each occasion, we have aired topical issues with particular resonance at the selected location. In Singapore, international sanctions, responsible sourcing and responsible logistics featured as core discussion issues.

 

International sanctions

Global commodities trading companies face numerous challenges as they seek to comply not just with the letter but also with the spirit of international sanction regimes. Trafigura’s presentation discussed the complexities surrounding compliance and the steps it is taking to ensure it doesn’t fall foul of the rules.

Stakeholders discussed technological tools to enhance traceability across the supply chain, including blockchain and artificial intelligence (AI). They also considered mechanisms for working with regional governments and the wider supply chain to introduce global best practice on sanctions compliance.

 

Responsible sourcing

Trafigura set out some of the challenges it faces at the other end of the supply chain, to source commodities responsibly.

Commodity trading firms face increasing scrutiny from customers and stakeholders that want better safeguards and more extensive due diligence. The assurance goes beyond worker health and safety; environmental and social performance also merit close attention. Complex, sometimes competing, issues are at play for producers and traders. Trafigura’s presentation described its approach to responsible sourcing in the cobalt supply chain.

The 2015 Paris Accord identified rapid transition to EV transportation as a core strategy for combatting climate change. That has led to increasing demand for battery technology which is putting huge pressure on the already vulnerable cobalt supply chain.

The Democratic Republic of the Congo (“DRC”) holds most of the world’s cobalt reserves. Artisanal and Small-Scale Mining (ASM) accounts for over 20 percent of its production, employing more than 200,000 people.

The informal structure of ASM makes it challenging to regulate. For some cobalt traders ASM is an unacceptably high-risk activity; they have chosen to exclude it from their supply chains.

Trafigura focuses on formalising the sector where it intersects with its supply chain and raising ASM production standards. It is engaging with local communities, establishing safety rules and working with a developmental NGO to ensure that impacts inside and outside of the fence are mitigated.

 

Responsible logistics

Trafigura uses third-party contractors to transport oil and petroleum products, minerals and metals both inland – via rail, truck and barge – and overseas. It remains liable for collisions, groundings and mechanical issues that can lead to injuries, loss of life and environmental damage. Trafigura described some of the steps it is taking to mitigate these risks and reduce GHG emissions.

 

Stakeholder responses

Stakeholder contributions reflected their differing perspectives. They asked about respect for world heritage biodiversity hotspots, our stance on carbon pricing, how seafarers’ welfare is protected, what technological tools there are to support chain of custody accounting and how we are promoting responsibility and transparency more broadly in our industry. Trafigura will pursue and report back on questions raised.

Multi-stakeholder forums air diverse views that inform HSEC, Corporate Responsibility and wider Corporate Affairs strategy. We will continue to host these meetings on a regular basis in future.