Due diligence in the coal supply chain

WHY BUSINESSES NEED TO BE RESPONSIBLE TO REMAIN COMPETITIVE

Sustainable supply chains are not just crucial to the preservation of our environment and the respect of human rights, they are also good business. Mineral supply chains are complex, and mining is an industry often associated with environmental degradation, safety incidents, human right violations, etc. But mineral products are also vital to our societies. It is because they are so vital and present in everything we use that due diligence and responsible supply chain initiatives in mining are crucial.

Coal is still an essential part of our economies, not only used for power generation, but also for the manufac- turing of steel, cement and several chemical products which can be produced from the by-products of coal. Coal is under even more scrutiny because of its direct link to Climate

Change. However, as long as coal remains important in our societies, we need to look beyond that aspect of the debate around coal, and producers and buyers alike need to focus their attention on the way coal is mined and transported to its end users.

Identifying and managing social and environmental risks in the supply chain is a business imperative and Bettercoal was created to deal with just that concern: ensuring that the coal purchased by Bettercoal Members comes from mines committed to a continuous improve- ment process of their operations. The enabling system created by Bettercoal insists on the principle of continuous improvement as opposed to simple compliance.

At the core of the initiative is the Bettercoal Code which covers ethical, social and environmental principles and provisions grouped into four critical areas: General Implementation Expecta- tions (Legal Compliance, Policies and Systems); Business Ethics (Disclosure, Bribery and Facilitations Payments); Human Rights and Social Performance (Human Rights, Workers' Rights, Community Engagement; and the Environment (Environment, Pollution Prevention, Biodiversity).

Bettercoal assesses performance of coal suppliers against the ten principles of the Bettercoal Code and jointly develops Continuous Improvement Plans, the summary results of which are shared with Bettercoal Members. All 13 Bettercoal Members then take into account the results of the assessments in their purchasing decisions and due diligence processes. By bringing buyers and producers together, Bettercoal is working towards a global responsible coal supply chain.

Bettercoal was established in 2012 and since then has been working with mines across the world: Colombia, Russia, the United States, South Africa, Poland, Indonesia, Kazakhstan and the United Kingdom. All these countries have mining companies which have undergone in total more than ten Bettercoal Site-Assessments. Bettercoal Members purchase coal from across the globe and therefore connect with mine operators in many different countries.

While the long-term goal of Bettercoal is to engage with all its Members' coal suppliers, the organiza- tion requires a pragmatic approach that allows the allocation of limited resources to Bettercoal's priorities. Therefore, the current priority focus for Bettercoal has been on the large coal exporting nations of Colombia, South Africa, Russia, Indonesia and the United States. Bettercoal is a growing organization and as coal consumption moves East, it is always looking for new Members and coal suppliers who want to support the improvement of the coal supply chain.

Coal will continue to be challenged as the world transitions to low carbon sources of energy. Producers and buyers should continue to work closer together to develop a shared understanding of the risks and build a system where demonstrating continuous improvement in practices will become a key purchasing decision factor, as important as price.