Welcome to our webinar on responsible sourcing in the cable value chain. The energy transition and the electrification of the world require more and more cables, and this will last for decades. In parallel, ESG requirements for companies are no longer an option in order to protect employees, to protect the environment, and to protect the society. As a consequence, all the industry players along the cable value chain are adopting responsible sourcing practices. Today we will discuss three things. One, what is responsible sourcing? Two, what are the supply chain challenges and the commitments on human rights that the leaders are taking in the industry? Three, what is the role of standards? To do that, we have the pleasure to welcome a distinguished set of industry leaders. I will start with you, Isabelle Hoepfner-Léger.
You are General Corporate Secretary at Rexel, a leading distributor of electrical materials and a large client of Nexans. Daniel Hojniak, you are Chief ESG Specialist at KGHM, and you will bring us your perspective as a copper producer. Mike Smith, you are Value Chain Director at Copper Mark, and you will discuss about the standards in the industry. David Grall, you are VP Sustainability and Corporate Transformation, and you will bring us the perspective of a leading cables producer. My first question is actually for you, David. As an industrial company, what does Nexans do in terms of responsible sourcing? What is your definition of responsible sourcing and what are your challenges?
Thank you, Mark, and everyone. Thank you so much to our experts. Responsible sourcing at Nexans is not just a process. It is one of the cornerstones of our commitments towards sustainability. As a leader in cable manufacturing, it is important for us that our commitments reflect the way we are building up a sustainable future, a resilient future. For us, it's embedding the ESG principle into the way we are doing the business. Every purchase, every method of cable we are selling to the end customer reflects the respect of the human right, the reduction of environmental footprint, and adherence to ethical business. This is what we have called at Nexans the ESG philosophy and the way we are operating. Let's go back to the key priorities. First, the key priorities are anchored in the OECD due diligence, as well as the global compact UN commitment that we took.
This is to align our ambition first in order to talk about culture, purpose, why, and remain compliant with the regulation. The supplier, they have to be engaged at the same level as Nexans is regarding the commitment we took for the sustainability. One of the examples is to have fair labor, having the same scoring standardization with EcoVadis, a long-term partnership that we have with KGHM, with you, Daniel. When it comes to the clients, how we work together in order to align the value chain expectation down to the end. This is a current example with the Cable Loop offer that we have deployed recently in order to recycle the post-end-of-life cable in order to reinject in the recyclability ecosystem. Last but not least, with the client is the traceability from A to Z. That's our key priority and how we define responsible sourcing, Mark.
Thank you, David. Isabelle, Rexel, from a distributor standpoint, what are your expectations and challenges on responsible sourcing?
Our expectations are mostly to meet our clients' needs. I mean, we love our clients. We want to please them. More and more of them, especially the big ones, have their own commitments. They also participate in public tenders where cable is obviously everywhere. They will expect from us that we provide them the best possible products. We are about EUR 20 billion company. We're in 17 countries. Cables represent between 15%- 20% of our sales, depending on the countries. It's a very important product category. In terms of sustainability, it rings a bell a lot because everybody knows about copper scarcity. Everybody knows about the issues from extraction of copper. Everybody reads the press and saw what happened. There are also a lot of questions from our customers on this topic.
The main challenge that we have to meet our customers' and clients' expectations is that they follow us when we recommend some choices on products. In order to do so, even if we are deeply committed to sustainability ourselves, we need transparency and data from the suppliers. Because we are proposing some products with some transparency and some carbon emission and some traceability behind that, we, of course, have to make sure that they are accurate. This is also a good way to select the suppliers and to build a long-lasting relationship and also to involve third parties that would help us to testify that the whole value chain is healthy.
Thank you, Isabelle. Responsible sourcing is about environment, circularity, safety, and social rights. Let's discuss now about the supply chain and safety challenges. David, again, a question for you. What are your main challenges in ensuring responsible sourcing in the supply chain?
Yeah, I'm sure we all acknowledge that we are living in a world of changing regulation. There's carpet bombing regulation, and we can spend the hours to list this regulation, as well as rising client and supplier expectations, the environmental and social risk as well, while in the meantime working on sustainability and on competitiveness from A to Z. That is important. This is why Nexans, we have developed this famous EFRI model, EFRI philosophy, in order to combine in the meantime the environmental performance, social performance, while remaining competitive on the economic pillar. When it comes to the challenges, I will name it in four different categories. First of all, the social and environmental category. You said it, Isabelle. The social is important because we have to face in an industry where forced labor, human rights, child labor, we have to pay attention and stay focused.
That's why we're working with a long-term partner, and this is important for us. Environmental, our industry is GHG intensive in terms of emissions. That's important for us that we are monitoring the entire value chain surrounding that. Regulatory and client expectation, that's key. I will not spend the hour to list, but we call it CSRD, CS3D, TNFD, ODD. We have an environmental context regarding regulatory context that is really, really important. This is where you mentioned clients expect transparency, and traceability. There's nothing worse than having a lack of traceability from the extraction to the transformation down to the end customer. This is key. That's why we are working. Again, with the Cable Loop offer that we may have, this is important to avoid reinjection on virgin copper or recycled copper and the way we are dealing with that. Ensuring supplier compliance.
Daniel, we know there's a long-term relationship between our two companies. We want that the CSR adherence on the charter. We want to mirror the standard from the supplier to the end customer. That is key for us. Last but not least, we can talk about the supply chain disruption. It's obvious that there is a geopolitical context that is at risk today. We have to face potentially scarcity. This is key for us to keep that. Despite these challenges, responsible sourcing is one of the key levers in order to be sure that we are building up all together through the value chain a sustainable future.
Thank you, David.
That's the main challenges.
Quite a lot. Thank you, David. Daniel, at KGHM, how are your practices evolving to respond to all these expectations?
Yeah, thank you, Mark. David, I noted four main themes from your speech: regulatory and client expectations, environmental and social risks, supplier compliance, and disruptions. I will start with this last one. There is no doubt that geopolitical and climate risks heavily affect the world's copper supply. What is more, it's projected that the demand for copper will rise in the upcoming years. Copper is essential for decarbonization. We need it for renewable energy systems. We need it for electric cars, which, by the way, require almost 4x more copper than combustion cars. It's estimated that the International Energy Agency expects shortages of copper in the next 10 years. It's definitely not the time to panic because it's also estimated that the resources of copper in the world should be enough for at least 200 years. There is a clear bottleneck between the demand for copper and the supply.
How do we, as a copper producer, respond to these challenges? When it comes to the primary copper, so mined copper, we obviously ensure stable volumes of supply, but keeping in mind the environmental impacts, for instance, our carbon footprint of our operations and the water footprint of our operations, and obviously conditions for our employees, especially those working underground. For instance, right now, we are investing billions of euros in the construction of three new mining shafts. One of these three shafts will be dedicated for ventilation to increase the fresh air rates and to increase the amount of cool air underground. I think that some of our viewers right now might be wondering, wait a second, what about circularity? Perhaps we should focus predominantly on the recycled copper. This is where things get slightly more complex because of this market uncertainty.
Supply volatility of copper scraps is a serious issue. While we, as a copper producer, don't have the full control over this aspect, we do what we can to diversify our suppliers. We do what we can to source these copper scraps locally. It's not easy because the whole industry is interested in these copper scraps, and there's simply not enough on the market. The International Copper Association estimates that the average lifetime of copper in a product is 25-30 years, while 2/3, so almost 70% of all copper produced since 1990, is still in use. What that means is that in the upcoming years, these copper scraps are not magically going to appear on the market because this copper is still in use.
It means that there's no simple solution, but we need to balance our approach and focus both on increasing, if possible, the amount of this recycled copper, as well as try to reduce the emissions associated with the extraction of the mined copper. We also mentioned regulations and client expectations, regulations which, for example, require us to disclose on environmental risks and social risks, as well as the expectations of our clients who require from us compliance with schemes such as The Copper Mark or EcoVadis. I think that one word which links all these themes together is transparency. The same transparency that is one of the key reasons behind the introduction of the ESG reporting. Transparency also pretty well links with traceability that you, Isabelle, and you, David, touched upon.
When it comes to this traceability from the producer's perspective, it's not that difficult for the mined copper because these are our own operations. We have full control over our processes. It gets quite tricky when it comes to recycled copper because it's simply very difficult to learn the whole history of the particular copper scrap. Perhaps that's the area where schemes such as The Copper Mark could help us just so that we are able to demonstrate that the scrap material was procured in a sustainable manner. Thank you.
Thank you, Daniel. Lots of challenges. You need to work on the environment protection. You need to work on the social protection. You need to deal with scarcity and foster circularity. My takeaway from this first discussion is that it requires a lot of transparency and collaboration across the value chain. Let's talk now about the role of regulators and standards. Mike, for Copper Mark, can you tell us a bit more what is the role of your organization across this value chain?
Absolutely, with pleasure. Thank you very much for having us on the panel for this really fascinating and interesting discussion. The Copper Mark is the leading global responsible production standard for the copper industry. The organization was set up only five years ago, but already covers 40% of all mined copper coming from sites which have received The Copper Mark, and 30% of refined copper coming from sites which have received The Copper Mark. We've already seen significant take-up, which is really, really good news. We cover mine sites, we cover smelter refineries, and also semi-fabrication as well. We cover the value chain up to that transformation point. In addition to copper, we also cover nickel, zinc, and molybdenum as well. The Copper Mark is, for our main standard, based around 33 key criteria. These cover numerous different environmental, social, and governance risks.
Companies need to ensure that they have taken action around those criteria and they fully meet those criteria before they are awarded The Copper Mark. Those 33 criteria are based on and embedded in international agreements like the OECD due diligence guidelines, like the ILO, International Labor Organization conventions, and UN protocols on climate change. They are based on these internationally agreed agreements and guidelines. The really important aspect around standards like The Copper Mark is the third-party assurance framework that backs up and supports all of the criteria. Any standard is only as strong as the assurance process that you have behind it in order to assure that the aspects have been implemented. We have independently verified third-party assurance, and all of the reports are published and transparent on the website as well, which I think transparency is also another key principle. We have strong and credible standards.
One other important aspect around The Copper Mark is we try to make sure that they're practical as well because you have to have a standard that's able to be implemented in practice in order to drive real change across the industry. Otherwise, you don't get anywhere. The final point that I would like to make around our approach as The Copper Mark is that we're not focused on any specific point within the copper value chain. We take a full value chain approach. In addition to The Copper Mark 33 criteria, we also have a chain of custody standard as well, which enables joined-up responsible production through those different points in the copper value chain as well. We work with downstream industry too, with 60 partners who are downstream OEMs and midstream companies who commit to support The Copper Mark and responsible production throughout the industry.
That's our approach in a nutshell. As I say, we've had some significant uptake in success in recent years. Looking forward to continuing to work with some of the companies around the panel in the future.
Thank you, Mike. Daniel, a question for you. How do you use Copper Mark standards in practice?
First of all, we decided to implement Copper Mark certification in phases to our operations. We started with our smelters producing copper cathodes, and then we moved on with this process with our wire rod plants. Obviously, we come up with quite a few challenges on this path. First of all, we had to involve quite a few teams in this process: environmental teams, safety teams, HR teams, production teams, compliance teams, et cetera. You can imagine the amount of resources, even the human resources, that were involved in this process. Please take into account that we have a really big organization. We are talking about more than 35,000 people. That was a significant administrative task. Obviously, when we achieved certification, it meant some concrete benefits for us. As Mike just a minute ago said, this is one unified standard which combines best international practices.
It's a globally recognized tool, and so recognized and required by our key clients. What we did is we merged the requirements of The Copper Mark with our internal policies, which obviously had a positive impact on our daily operations. For instance, we developed and implemented a due diligence procedure for copper supply chain. Also, thanks to achieving Copper Mark, we automatically received or demonstrated compliance with the mandatory responsible sourcing criteria of London Metal Exchange, so LME, which meant some time that we saved in filling out all these formal issues. Ultimately, that's something that Mike mentioned. It's a third-party verified scheme, which is the key thing here because it simply means that somebody else reviewed our operations, our policies. It definitely builds trust. It builds transparency. These are the things that we really care about. Thank you.
Thank you. Standards like Copper Mark are really essential, right, to establish trust, transparency, and harmonize best practices.
Traceability as well, like we mentioned.
Yes, of course. Maybe let's speak about collective engagement, right, in order to build a truly responsible and circular value chain across all the players around the table and in the industry. Maybe a question for you, Mike. How could we strengthen this collaboration to accelerate responsible sourcing in the value chain?
I think the key point here, really, in my view, is there's more to do to really join up the approach that we have across the full value chain. I think we've made a really good start in terms of the responsible sourcing and responsible production practices at each point within the value chain. I think there's more to be done in terms of joining up those different points. We've spoken several times around traceability within the value chain, and sometimes traceability and transparency tend to be used in conjunction with each other.
I think the truth is that full traceability from mine to end user is actually very difficult to achieve within the copper industry because the nature of many of the value chains is that copper is mined, and then it's mixed, and then it's melted, so it becomes a liquid, and then it's turned into a solid, and then it's melted again, and then scrap is added. It goes through several transformations, which means that if you're looking at traceability on a molecule-by-molecule basis, it's very difficult to achieve in practice. That doesn't mean that there aren't ways to collaborate and work to improve transparency within the system and also to ensure that responsible production is joined up at every point.
From my perspective, I think that as well as looking at the ultimate goal of traceability, we should be thinking around things like chain of custody standards, mass balance models, which are more able to be implemented in the short term to help to achieve some of that assurance around the full value chain approach with a view in the future, once those are in place, to move on to full kind of traceability. I think that discussions like this are absolutely crucial because oftentimes you'll end up talking to a company in the downstream and a mining company in the upstream, and they're having slightly different conversations around the priorities and issues. More of this kind of discussion where you're bringing together actors from the upstream, middle of the value chain, and downstream, I think, are really, really important.
These are some of the things that we're looking at and working on within The Copper Mark. We want to put forward chain of custody and particularly looking at some specific pilots around that. We want to develop more platforms and opportunities to have these sorts of integrated discussions. That's where I would say some of the key challenges and opportunities as well for the future.
Thank you, Mike. Daniel, for you, what are the ways to increase collaboration, transparency, and build this circular and resilient value chain?
Yeah, so first of all, right now, today, we are representing manufacturers. We represent distributors and copper producers. Obviously, with you, Mike, looking at our hard work from the above. It means that we are simply present in each other's value chains. We are on the same team because both we and our clients are interested in products with positive ESG credentials, so low carbon, high recycled content, positive social impacts. By having shared ESG goals and working towards them, we simply meet the expectations of the clients and the society. One example of such a goal could be managing together the production copper scraps, so pre-consumer recycled content, actually something that you, David, today touched upon. I think this is a great idea. Schemes such as The Copper Mark could help us to unify our approach and together with ESG reporting increase our transparency.
Transparency highlights the responsibility of the companies we represent for the society and for the planet. Thank you.
Thank you. David, what are your views?
In fact, I like what has been shared just by Daniel and Mike regarding the value chain. The image I have in mind is the value chain looks like a straight arrow like this. Why we are talking about how can we put circularity? Making the value chain linear to circular. I like this idea because at Nexans, and not only at Nexans, the entire value chain, what we try to do to reinforce the collaboration is how we can build a resilient, transparent ecosystem. I like this word, ecosystem, because this is an ecosystem. Honestly, if I talk about the two metallurgy facilities that have been rewarded by Copper Mark in Montreal and Lens at Nexans, that's not been possible if we did not have the long-term partnership with KGHM, for example, as a supplier.
That's something that is not just Nexans on operation that is dealing with that. That is why when we are talking about resilient, transparent, think Isabelle and Rexel, they are happy to know where the copper is coming from, how we are refining it, and that is labelized in our facility and metallurgy. That's one of the key principles. The way we are driving it at Nexans is regarding understanding the full pain point of the value chain, not only the way we have to deal with because own operations, most of the time, the easiest way to deal, but the entire value chain is not easy. We talk about extraction activity. It's a complex activity. As well, the distributor activity is not something because we are talking about logistics. We are talking about long distance, even if they are local for local. It's key.
When you combine all of that, it's key to understand the value chain's pain point to co-create. If I don't understand what Isabelle's client and client's request or needs, I am not able to work with KGHM, Daniel. It impacts my own operation. That's the first thing we are driving at. Second, it's the communication and transparency. You said it, but it seems obvious. It is, but we have to reinforce it and prove it. The way we have done it at Nexans is we are building up surrounding the E3 philosophy model, like the platform with the data inside. You know, Daniel, that we are scoring the main customer through the E3, so the three-dimension. We are scoring our sites as well for the three-dimension. That's something that is key. Data sharing is something that definitely brings in evidence the transparency. This is the second point.
The last one is how we can work together on the circularity, together on the circularity, because we cannot work alone on the circularity. We need end copper or second end copper if we want to reinject or if we want to refine the virgin copper. We need to masterize and we need to monitor the entire value chain for the circularity. To do this, it requires strong collaboration. I will take just one example. We have invested, or we are currently investing, in Lens, north of France, in the new metallurgy facility called NCCCR that will bring up to 30% of recycled content in the metallurgy. That's something that cannot be performed alone with Nexans' own operation. We have partnered with an industrial partner called Continuous Property.
We will need to deal with Daniel and KGHM through this long partnership and deal with Isabelle and Rexel as well to the end product and the low carbon offer or recycled content offer that we may want to deploy. That's the way I see it. If I can summarize that, I think we promote the knowledge sharing. One of the evidences is what has been deployed and organized by the purchasing team at Nexans back in June, the supplier day, because it was the place to exchange the main ID, all supplier and customer, because we are all customers of a supplier at one point of time, how we can deal all together and share this knowledge. That's the way at Nexans we can see the collaboration and how we can reinforce it.
Thank you, David. Isabelle, for you, what are the right ways to foster collaboration and build this resilient value chain?
I will bring the last brick of the value chain, which is the whole movement up to the end customer. Use some of your words. Alignment is key. We absolutely need alignment. We also need, or we also need very concrete actions. We enter after us a kind of bottleneck where we have big customers. We also have smaller customers. Our role is also to persuade, to sell, to motivate, to educate all the people about the value of what we all together have created in terms of sustainable sourcing and sustainability. These very concrete actions, we try to develop them. Internally, we have a cable group with people. We have a very strong partnership with Nexans in Canada, where we deal with the cable offcuts.
This cable group internally has done kind of learning expeditions in different countries to see in which place we can do something, which action we can push. We need to start small. We need to start local. We need to be very humble because this is the way distribution is and our end customers are. You really need to assess what works well and what you can scale, what works less well, and that you have to drop. At the end of the day, this is exactly how you will bring the end customer into the whole value chain. Without these concrete actions and movements, it will still remain us and we, Rexel, pushing for some products that they need for some of them, not all of them.
We need to expand the territory of people really wanting to have additional products to make sure the whole value chain makes sense for the years to come. This is alignment and very concrete actions.
Yes, this is how we turn commitment altogether into action. That's exactly what you said.
Thank you. Isabelle, on top of collaboration and partnership, what would be for you the next steps, both on the short term and also on the long term?
Talking about what we control, meaning ourselves, leaving aside geopolitics and the world the way it is, short term is to keep the boat on track. I mean, you know we have a strategy. Sustainability is really a deep strategy for us, as for all of you. We're not going right one day, left the other day. We just keep straight. We keep pushing it. What we realize is that internally, our employees just year after year consider that they like being and working for a more environmentally responsible company. We keep that direction. We keep that direction. We keep the discussion with our suppliers. We keep pushing our clients into the loop. We have to say we have our sustainable selection. We'll have to have more copper and more cables in it if we have more reliable data to push and to show.
Short term, really keeping what we are doing and not being distracted by what can happen around us. All the investment that we've put into that, all the strong and deep belief that we have, and all the economical business case that we build around that will stay longer than what currently happens. That's short term. Long term, I already mentioned it a little bit, we have to bring our customers into the loop too. That's not an easy topic. You talked about a unified standard. I would dream of it. I would dream of, you know, instead of talking about, we're talking about the digital passports, the EPDs, but have one language that we can commonly speak to provide our customers with, you know, we provide a lot of services into calculating carbon emissions. We have a sustainable selection where we push the product.
We have an eco-scoring of products. We train and bring our customers into understanding what it means to have less emissive carbon or better source products. Having one unified standard would help the whole profession, I mean, to move towards the same direction massively because the long term is really there, making sure our customers think the same way that we think.
Thank you, Isabelle. I think it's time for conclusion. Thanks a lot for your insight. It was very rich. I believe we have a much better understanding of what is responsible sourcing. We've discussed the stakes on circularity, managing scarcity, protecting the environment, managing social rights. All of this requires true collaboration and transparency. I think that's a little bit the key word of the discussion. It's great to have all these players along the value chain or the circular value chain to show that it's really super important. I think we have time for a couple of questions from the audience. I will look at my iPad with some questions prompted. Maybe a first question for you, Mike, at The Copper Mark. What do you see for Copper Mark? What role do you see for Copper Mark in accelerating circularity and secondary sourcing of copper?
Thanks very much. In terms of accelerating the drive and demand for circularity, I think, as we've heard today, there's already a very, very strong demand and driver to increase the amount of recycled content or scrap that's used within the copper value chain. That is just increasing, I think, all the time. The demand is increasing, driven by a need, A, in order to demonstrate the circular economy and to drive circularity, but also as a means to reduce the carbon footprint of copper products as well. I think the drivers are well established.
Where a standard and assurance framework like The Copper Mark can come in, I think, is looking a little bit deeper into some of those recycled content supply chains and considering that within some of those supply chains, there may be ESG risks themselves in the collecting, in the sorting, and in the processing from an environmental perspective, from a governance perspective, and also from the social and labor standards as well. I think for a standard body like The Copper Mark, first of all, it's about the responsible sourcing requirements.
There is a requirement within The Copper Mark in order to do due diligence on suppliers of recycled content, but then potentially looking deeper as well around some of those risks within the value chain, within the supply chain for recycled content, and being able to provide assurance that the recycled content that companies are purchasing is responsibly produced as well. The second aspect is around the methodology, I think, for calculating recycled content. Currently, there are different methodologies for calculating what is classed as recycled content or not within a copper product. I think that there's a role in terms of trying to standardize that and then also put in place the assurance frameworks to assure that those are being implemented accurately.
I think those are the two big areas that a standard body like The Copper Mark should be looking at in terms of recycled content and ways in which we can support the industry to achieve that.
Thank you. Daniel, question for you. Mining is energy intensive, right? What are KGHM's main levers to reduce its carbon footprint while keeping its competitiveness?
All right. It's a tricky question because, as I think, David, you mentioned, decarbonization in general for heavy industry is a big challenge. This question focuses on two aspects: decarbonization and competitiveness. Let me start from the very beginning. I would say that we identified two key areas. The first one is efficiency. We try to improve the efficiency of our processes. For instance, we implemented ISO 50001 standard for energy management in our operations. Another example I could give is the digital twin technology that we implemented in our smelters. This allows us to simulate the results of our plant actions in a digital environment before the actual execution. That was efficiency. When it comes to the actual decarbonization, I feel that I need to give you a little bit of background.
We, as KGHM, are one of the biggest energy consumers in Poland because we are such a big company and we are in the heavy industry. For us, it's a challenge because we need to rely on the national energy mix, which in Poland heavily relies on coal. Luckily, this is changing. I'm not going to say at a really high pace, but it's changing positively. This is the reason why one of our key actions is to build our own clean energy sources. This is happening right now. We are developing and building mainly solar farms, and we are also interested in wind projects. Apart from this, we engage in power purchase agreements to buy clean energy from external providers. This is one thing. Apart from this, we are investigating electric vehicles in our operations, also underground. Quite recently, we tested hydrogen trains.
We use trains for many different reasons in our operations, for instance, for the transport of copper ores and copper concentrates between mines and smelters. The results of these tests were very positive. We were really happy about it. We also investigate carbon capture and storage technologies. This is a technology that changes very rapidly, but we are keeping our fingers on the pulse. The second part of the question was about the competitiveness. Obviously, all these actions are related to very high capital costs. We are aware of it, but we are looking at these issues in the long term. In the long term, this would mean that we would have our own independent energy sources. We would reduce our reliance on the national grid, national energy system. We will simply cut the costs related to the emissions.
While at the very beginning, this will be expensive and it's expensive, we are hoping that in the long term, this will have a positive effect on our financial results.
Thank you.
Thank you.
David, question for you. How do you follow up with suppliers that have not signed the CSR charter and are not compliant with Nexans standards?
Interesting question. I would say that from the huge amount of suppliers we are working with, we have set up a methodology that looks like a funnel. One of the entry points is, of course, if they sign directly the CSR charter and they mirror what Nexans is doing, is committed to, it's easy. If for any reason we try to investigate, we have additional questionnaires. Like I said before, during the webinar, we are scoring our main supplier through the E3 scoring and E3 performance. That's something that is guiding us regarding the performance, and that is matching our CSR scorecard. The additional questionnaire may help us to work on that. If for any reason, and mainly for the public and large company, the question remains unanswered, we are trying to match what is publicly available, what is publicly disclosed, and what they are labeled through EcoVadis score.
Of course, Copper Mark score definitely, where if a public company, there are Copper Mark labeled, like you said, Mike, 33 main points standardized across the entire questionnaire. That's a trigger that they are mirroring our CSR commitment. This funnel is going down to potential specific audits that we are requesting on an external provider because definitely there is something we are not dealing with. It's the compliance and regulatory stuff. When we are committed towards CSR and ESG as a whole, it's important for us that we are working with partners, and I use the word partner rather than supplier, that are matching our expectation. I can take one example.
If we are committed to decarbonize and work surrounding ESG, but one of the main suppliers is not, and not at the same speed or not at the same volume or the same expectation, like we said during almost an hour, that this is value chain and ecosystem, it will impact and will be detrimental to one of the others. That's why this funnel methodology, in order to be sure that we are working with the well-advanced or most advanced supplier, is key for us. The purchasing team, they are doing a great job through the CSR responsibility in order to be sure that our main supplier, what we call the platinum supplier, they are respecting our standards that are very high. That's the way we are dealing with it.
OK. Thank you. Isabelle, what about Rexel? Do you have a supplier scoring system in place? How do you deal with that? Do you monitor improvements over time or maybe some alerts sometimes with your suppliers?
We don't have a scoring system. As you can imagine, we have, I don't know how many lines of products. I would say millions, probably not that much, but maybe. We have a huge amount of suppliers. What we do is we classify them, and it's the most important one, into different categories. There is one category that we call the shapers because they shape the sustainable future with us. Nexans is part of them, where we have a dedicated partnership on different topics, communications, presentations, products that we push more than the others. We tend to focus on the few suppliers that are really dedicated like us. We also have our CSR charter. We are also EcoVadis gold. We follow, I would say, most of the rules that you have all described here. This is why the whole value chain is, I would say, consistent.
We're talking about alignment and transparency quite openly. This is where we work. When we have specific products on which we might have doubts, then we will also perform dedicated audits with a third company to make sure that everything is in line with what we request.
If I may add, Mark, on this question specifically, one of the key challenges we are all facing is not only our facing supplier, but the subcontractor that we are working with. This is where, and I'm sure we are all knowing what we are talking about, subcontracting is something we have to monitor and focus on. It's not because we are delegating the task, the activities, that we're delegating the responsibility. The world we are living in, the context, general context from a regulatory perspective, is global. If something is going wrong in one of the subcontractors of Nexans or KGHM, I feel responsible. Nexans feels responsible. That's why we have to deal with that and perform the appropriate due diligence. When we are talking about funnel of methodology, it's not something the forefront supplier, but as well the ecosystem that is providing.
That's why it's key to work in a partnership mode just rather than supply mode.
Thank you.
Totally.
I think we have time for a couple more questions. Maybe for you, Daniel. Human rights and community engagement, which are obviously very, very critical in the mining sector. Could you share a little bit more, how you ensure what is called FPIC, so free, prior, and informed consent, and address local community concerns?
All right. Thank you, Mark. You only asked me tricky questions today, but that's fine.
I invited you for that.
All right. That's fine. Basically, I assume that the question mainly relates to our activities in the U.S. and Canada and our relations with indigenous or native communities. We have a dedicated team to stay in constant touch, to listen, and ensure that the native communities feel heard and respected. Actually, I have a good example because quite recently, we signed an agreement with one group of indigenous communities in Canada. It took years of consultation, talks, relationship building, participation, and cultural events. Right now, it will be our responsibility to work together with these communities and to achieve this balance between economic prosperity and protection of lands and waters, and obviously, the rights of the people who live there. Thank you.
Thank you. Mike, question for you. Beyond compliance, how do you encourage companies to continuously improve, for example, on human rights or climate action?
One of the aspects of The Copper Mark standard and one of the inherent values that we have as an organization is constant improvement over time. The Copper Mark as a standard and a set of standards doesn't stand still at any point. In fact, I mentioned that we were established five years ago. We're already on the third version of The Copper Mark main guidance, and that's because we're always looking at and trying to understand what are the market expectations, how are they changing, what are the regulatory expectations, how are they changing, and trying to ensure that The Copper Mark is in line with all of those requirements. Also, for a site that implements The Copper Mark, it doesn't just stand still. It doesn't get awarded The Copper Mark, and then we go away and they've got The Copper Mark forever.
It's on a three-year cycle of assurance. Every three years, a site that has The Copper Mark will have to be reassured against those standards. It ensures that continual evolution is happening over time, and that's embedded within the Copper Mark standard and processes.
OK. Thank you. Isabelle, maybe another question for you. As a distributor in direct contact with customers and users, how do you consider your role or added value in the circular economy? Are you an advisor, prescriptor, educator, facilitator?
Lector.
Yeah, or many other roles.
All of that. We usually describe ourselves as an influencer, and this is what we are. We are very proud of being that. We are all of that. We have to train our own teams, we have to train our clients, we have to explain, we have to partner with the suppliers to make sure we have the right product, the right data, all of that. We are not experts of the products we sell. We do not manufacture them. We're not experts in the copper mining extraction or certifications. We sell millions of products, but on each of these products, our expertise is to make sure we can provide additional services to our clients, especially in sustainable services, or a big part of our services now, energetic evaluation, CO2 emission assessment.
In order to sell these services, to raise the awareness of our clients, we'll rely again on what you tell us. That's more our part. We're not manufacturers. We are just influencers and also teachers, everything you said.
Thank you. Maybe a question for all of you, actually, coming from the audience. Do you think that AI can help to manage all these challenges?
AI helps us when we try to go through the millions of data that we get on the products, to filter them, to analyze them, and to put them in our system that we have built internally to provide these famous services I mentioned about CO2 emissions. We have been using AI for years already on data.
It is already here.
On data.
OK.
I think I have the same insight as Isabelle. Basically, where I see the biggest benefits from AI is to help us handle this great amount of data. Right now, this is the biggest bottleneck. This is why we all get sometimes a little bit irritated when we receive huge amounts of data regarding any aspect of our operations. That's probably the key place where this could be utilized, and then compared against other companies or processes.
OK.
On my side, if I may add, I concur and I agree with what has been said. At Nexans, we love to say that we are not using the data at the level we have to use it. I would quote our CEO that's saying that we have a methodology that's called Shift. Without Shift, our managers are using less than 20%, like a small portion of the data available in our system. We all have a big system. AI will increase the way we will be able to use this data and the capabilities in order to find alternative routes that we are not seeing as a human analyst. Definitely, in our capital market data that happened back in November 2024, it is one of the cornerstones, the Shift AI modes. We will continue to reduce the complexity that we have at Nexans.
Using data is something that is key, and we will continue to use for sure, definitely.
OK.
I think that one additional area where I think AI could be useful is regulations. David, you mentioned at the very beginning that we are being bombarded every month with new regulations. Perhaps AI could help us to handle this and summarize and translate these regulations in a language that is easy to digest for human beings. That could be a good use.
Excellent. OK, maybe a last one for everybody, if you still have some energy.
Always.
How are you fighting players who use unofficial supply chain channels of copper, whatever it means?
Wow.
Difficult one.
From The Copper Mark's perspective, within The Copper Mark, it requires due diligence to be done on all suppliers to a site, no matter who they are or what routes that comes from. Companies at sites who are receiving materials from suppliers have to look at the different risks within those supply chains and then take appropriate action according to the level of risk that they identify. If you talk about some of these channels, as and where those become more and more opaque and less obvious, it requires a higher level of due diligence and a deeper level of investigation into those supply chains, which is embedded within the standard. I think that's probably the best approach to take.
From our perspective at Nexans, I think our answer is in Mike's answer, meaning that our two main metallurgy are certified and Copper Mark labelized. It's important to mention that the proof of evidence, the documentation we have to provide in order to be certified and to conduct ethic business. Remember that what we have discussed at the beginning of the webinar, like we all have business conduct and ethic codes. If we want to comply to all of that, we have to evidence and prove through the documentation, the way we are behaving, the way we are conducting the business, demonstrate that unofficial source of copper supply is something that we cannot deal with. Otherwise, it doesn't make any sense what happened in this conversation for the last hour. That's the answer for Nexans.
Thank you. I think it's time to conclude. Thanks again for your insight. It was a great discussion. It's great to have all the players along the value chain to share this insight and to collaborate and bring transparency and bring the value chain to the next level. Thank you very much.
Thanks for the invitation.
Thank you.
Thank you.
Thanks to all of you.
Thank you.