Wednesday, 30 June 2021

LafargeHolcim’s sustainability rating – the small print

LafargeHolcim – the world’s largest cement producer with CO2 emissions to match – wants to help:


Not only that. Now is the time to act.


So why on earth do we have the scheme put forward at Straitgate Farm? Is all the talk of wanting to help, of sustainability, of cutting emissions, just that? Talk?
  

LafargeHolcim recently solicited an "Opinion on sustainability". Press releases were released. In the world of cement it’s a matter of greenwash, spin, repeat.


LafargeHolcim has obtained an "A1+ Sustainability Rating" from V.E – part of Moody’s ESG Solutions – with "an overall Environmental, Social and Governance (ESG) score of 65 out of 100." 

What does it say about ratings – from an organisation that played a part in the subprime mortgage crisis – if companies like LafargeHolcim – with CO2 emissions the size of Venezuela – are awarded "A1+" whilst at the same time plotting such polluting and unsustainable schemes as the one being advanced for Straitgate? V.E says: 
LafargeHolcim appears to pro-actively integrate ESG factors into its strategy and operations. Its approach is supported by many quantified targets and comprehensive commitments. Convincing means and processes address the most material challenges. KPIs mostly follow positive trends. However, the Company's performance is affected by persistent controversies, to which, on average, the Company communicates but does not report sufficient remediation measures.
"Controversies"? This is where we come to the small print. Because for all the back slapping there’s this: 
As of April 20, 2021, Lafarge-Holcim was involved in 24 controversies, seven of which are considered of high (6) or critical (1) severity. - As already mentioned previously in this document, the most severe controversy (considered of critical severity) relates to operations of Lafarge in Syria between 2012 and 2014, where the Company was accused of financing terrorism. This accusation has drawn huge media attention since 2016 and has led the CEO to resign in 2017. In addition, the former CEO and seven former Lafarge executives are still under judicial investigation. In between, LafargeHolcim has taken remediation measures to make sure that similar events will not happen again. - Out of the six high severity controversies, two relate to environmental issues. The first one, which affects biodiversity occurred in 2018 in Indonesia, after a barge delivering coal to the Company's cement plant at Aceh coast spilled around 7000 tonne coals on the beach, damaging marine life and devastating the livelihoods of the community. Even if the Company ensured that all actions were conducted in a timely manner to minimize further environmental impacts, LafargeHolcim merely stated that the responsibility for this incident lied with the company owning the barge. The other controversy relates to dust and VOCs emissions in Nigeria in 2020, which reportedly would deteriorate air quality and expose residents and employees to health problems. On this allegation, the response from the Company was considered proactive since it corrected the local problem with technical adaptations and also developed a new system to better detect further dust emissions. - The other four high severity controversies mainly affect the Company's management of human resources, with also some effects on human rights and community issues. LafargeHolcim has been accused of violating labour rights in Jordan in 2021, and of abrupt termination of work contracts in Philippines in 2019. Also, in October 2020, press sources reported that a court in Florida has accepted a request for damages worth USD 270 million from LafargeHolcim to over 20 parties from Cuba whose land was nationalised to build a cement plant in 2001 by a company that was taken over later by Holcim. Finally, very recently (in March 2021), IndustriALL Global Union reported that the world union council of LafargeHolcim called the company to respect workers' rights, protect jobs, ensure workers' health and safety at work and drastically reduce precarious work. The demand came out of an online meeting where more than 100 participants from 42 countries discussed union strategies to demand an end to LafargeHolcim's "bad labour practices. On average, on these controversies, the Companyeither does not communicate significantly or reports on its position but does not really disclose specific initiatives taken to tackle those local events. - The 17 controversies of significant or minor severity to which the Company is confronted mainly relate to environmental issues (affecting water, energy and climate change, waste management, and local pollution), and human resources (mainly employees' health & safety). A more limited number of such controversies affects the way the Company handles issues related to communities, anti-competition, social standards in the supply chain, audit and internal controls, and fundamental labour rights. Here again, the Company appears to report its position on these cases although it does, in most cases, not sufficiently report on corrective actions addressing these events. Based on the high frequency of controversies observed, as well as on their severity and on the company responsiveness to these events, our assurance on LafargeHolcim's ability to ensure balanced relationships with stakeholders is low.
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