Benchmark ranks lithium producers in new ESG report

Benchmark Mineral Intelligence has launched its first report that ranks global lithium producers based on Environmental, Social and Governance (ESG) criteria within the lithium supply chain.

The report aims to set new standards in the lithium industry through an ESG lens and provide clarity to the complicated ESG landscape. To this effect, the Benchmark ESG team created an independent methodology and researched an in-depth list of 61 metrics and indicators to narrow them to seven flagship indicators in order to assess companies on their sustainability challenges and accomplishments.

ESG is already overly complicated which pushes people away or allows them to hide behind these barriers,” Charlotte Selvey-Miller, Head of ESG at Benchmark, said

“At the core ESG should be about increasing transparency and accountability in this industry, yet many company changes (from structure to ambition and ethics) need to be assessed in order to understand this, which all feed into our 7 flagship indicators.” 

Investors are routinely analysing the ESG performance of global companies connected to the lithium extraction and refining ecosystem alongside other financial and strategic information in order to understand a company’s long-term response to climate change. 

Here we set out Benchmark’s methodology for ranking lithium producers based on ESG factors.

Setting the new ESG Benchmark

Benchmark’s seven flagship indicators are as follows:  

  1. The company has a current ESG or sustainability Report
  2. The Report is publicly available and easily accessible 
  3. The company has a designated ESG team or committee 
  4. The company uses biodiversity indicators to assess its impacts on the ecosystem 
  5. The company has a timeline or plan to reach net zero or carbon neutrality 
  6. The company has 3rd party verified LCAs or carbon emissions which declare beyond just scope 1
  7. The company has under 100% male board

A company must have a current ESG or sustainability report as a top criteria to make it to Benchmark’s ranking list. The report must also be publicly available and the company must have a designated ESG team or committee.

The company must use biodiversity indicators to assess its impacts on the ecosystem and have a timeline or plan to reach net zero or carbon neutrality. The company should also have a third-party verified life cycle assessment and have a board with at least one female member. 

The Benchmark Lithium ESG tier methodology

Benchmark’s methodology aims to reward engagement and transparency in ESG. The flagship indicators attempt to establish if the ESG is at the heart of the company and not just focused in a particular unit.  

Indicators such as gender equality should be represented at the board level, not just within the company, and net zero targets should be taken seriously.

The five rankings are classified as:

  • Benchmark Approved
  • Tier 1
  • Tier 2*
  • Tier 2-
  • Tier 3

A company will need to meet all the seven flagship indicators to meet the Benchmark Approved status, and 6 out of 7 to achieve Tier 1. 

Companies in the top rated category include Albemarle, Galaxy Resources, Livent, Mineral Resources, Orocobre, Pilbara Minerals, as assessed by Benchmark. 

Other leading lithium producers Ganfeng and SQM have been given Tier 1 status. Ganfeng does not have a timeplan to reach net zero while SQM did not have a diverse board at the date of publishing the Benchmark Lithium ESG report. Since Benchmark’s Lithium ESG update was released, SQM have since appointed two female board members so we are pleased to announce they will move into the top tier in the next issue. 

To reach Tier 2* status, companies must go beyond just producing an ESG Report. At least one other flagship indicator must be proven to be addressed by the company.

For Tier 2- ranking, a company must have an ESG Report or have completed the Benchmark ESG survey if it does not have an ESG report. This is mainly applicable to developing companies who have not yet completed a report but have plans in place to do so and are engaged with ESG activities.

Tier 3 ranking is allotted to companies that do not have any ESG engagement.

Lack of disclosure 

Benchmark found that 45% of operating lithium mining companies and 42% of operating lithium converting companies publish ESG reports. In comparison, just 9% of developing lithium mining companies and 22% of developing lithium converting companies publish an ESG report.

While China is set to maintain its refinery dominance through the decade and beyond, Benchmark’s ESG report says it has fallen behind South America and North America in public representation of ESG. 

China’s first ESG disclosure standard applicable for all industries became effective on 1st June, 2022, however, which should improve disclosure in the industry.

Learn more about Benchmark’s Lithium ESG Report

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