investment viewpoints

Engaging with aluminium on net zero and biodiversity

Engaging with aluminium on net zero and biodiversity
Rebeca Coriat - Head of Stewardship

Rebeca Coriat

Head of Stewardship
Anouchka Miquel - Stewardship Analyst

Anouchka Miquel

Stewardship Analyst

Aluminium is an energy-intensive industry that is crucial for the energy transition to net zero. Different companies are adopting varying approaches to reducing their carbon emissions. This case study outlines our engagement actions with two producers, highlighting the need for enhanced biodiversity considerations as a key issue in the energy transition and recognising there is no single way for any industry to decarbonise.

 

Need to know

  • We engaged with a US aluminium producer and a Scandinavian industrial company on their different approaches to reducing emissions
  • Our engagement activities focused on several areas including recycling, R&D, protection of biodiversity and controversies
  • We believe the strength of engagement is to identify examples of best-in-class practices, help each company pursue its pathway and encourage progress for the benefit of investors

 

Aluminium: an essential material

Accounting for 1.1 bn tonnes of CO2 emissions per year, the aluminium industry generates around 2% of global emissions resulting from human activity. In parallel, demand for aluminium, an essential material for several key industries including construction, transport and power transmission, is expected to grow by more than 50% by 2050 versus 2020.

The inherent properties of aluminium – it is lightweight, durable and recyclable – make it the material of choice for energy-efficient buildings, fuel-efficient mobility and recyclable packaging. As such, aluminium players have a pivotal role to play by delivering low-carbon-footprint products.

 

Engagement background and aims

There is no single way for any industry to decarbonise. The tabs below contrast two aluminium producers with different approaches to proposing low-carbon aluminium products: a US aluminium producer and a Scandinavian industrial company. Both engagements are at an early stage and the companies are advancing their decarbonisation in distinctive ways: the strength of engagement is understanding precisely that, and helping each company pursue its pathway.

In addition to carbon emissions, aluminium’s value chain, especially the extraction part, poses important environmental challenges. Ensuring biodiversity preservation is thus an essential engagement angle in this industry. Both companies have developed their own, unique methodology to assess the biodiversity impacts of their activities and establish restoration metrics on their mining sites.

We believe engagement offers investors double value: 1) By moving the decarbonisation needle at depth, one company at a time. While we cannot ensure what decarbonisation success lies ahead, as engagers we are encouraging progress for the benefit of investors; 2) By identifying best-in-class business models and approaches, we seek to foster improvements in laggard companies, even if more progress may still be needed in particular areas.

Click on each tab button to learn more

important information.

For professional investor use only

This document is issued by Lombard Odier Asset Management (Europe) Limited, authorised and regulated by the Financial Conduct Authority (the “FCA”), and entered on the FCA register with registration number 515393.

Lombard Odier Investment Managers (“LOIM”) is a trade name.

This document is provided for information purposes only and does not constitute an offer or a recommendation to purchase or sell any security or service. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful. This material does not contain personalized recommendations or advice and is not intended to substitute any professional advice on investment in financial products. Before entering into any transaction, an investor should consider carefully the suitability of a transaction to his/her particular circumstances and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. This document is the property of LOIM and is addressed to its recipient exclusively for their personal use. It may not be reproduced (in whole or in part), transmitted, modified, or used for any other purpose without the prior written permission of LOIM. This material contains the opinions of LOIM, as at the date of issue.

Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States of America, any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a United States Person. For this purpose, the term "United States Person" shall mean any citizen, national or resident of the United States of America, partnership organized or existing in any state, territory or possession of the United States of America, a corporation organized under the laws of the United States or of any state, territory or possession thereof, or any estate or trust that is subject to United States Federal income tax regardless of the source of its income.

Source of the figures: Unless otherwise stated, figures are prepared by LOIM.

Although certain information has been obtained from public sources believed to be reliable, without independent verification, we cannot guarantee its accuracy or the completeness of all information available from public sources.

Views and opinions expressed are for informational purposes only and do not constitute a recommendation by LOIM to buy, sell or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change. They should not be construed as investment advice.

No part of this material may be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorised agent of the recipient, without Lombard Odier Asset Management (Europe) Limited prior consent. In the United Kingdom, this material is a marketing material and has been approved by Lombard Odier Asset Management (Europe) Limited  which is authorized and regulated by the FCA.

Hong Kong: This marketing communication is distributed in Hong Kong by Lombard Odier (Hong Kong) Limited, a licensed corporation registered by the Securities and Futures Commission of Hong Kong (“SFC”) to carry on Type 1, Type 4 and Type 9 regulated activities under the Securities and Futures Ordinance (“SFO”) in Hong Kong;  ©2022 Lombard Odier IM. All rights reserved.