Last updated: 2026-07-09
Carbon Accounting Standards Across the Metals Value Chain — Scope 3 Becomes the Battleground
Metals producers face a widening gap between Scope 1/2 progress and Scope 3 credibility.
The GHG Protocol's Corporate Value Chain (Scope 3) Standard assigns most of a miner's climate footprint to
downstream processing — smelting, steelmaking — that sits outside its direct control, and this
structural reality is now colliding with commodity-specific stewardship schemes (ASI, Copper Mark,
ResponsibleSteel) that each define their own GHG disclosure bar.
1. GHG Protocol Scope 1/2/3 mechanics and why metals miners struggle with Category 1 and 11
The GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard defines
fifteen reporting categories, and for a diversified miner the two most consequential are
Category 1 (purchased goods and services), covering cradle-to-gate emissions of inputs such
as steel grinding media, explosives, and diesel, and Category 11 (use of sold products),
which for an iron-ore or coking-coal producer captures the downstream combustion or reduction emissions that
occur once the ore reaches a steel mill
(GHG Protocol, Corporate Value Chain (Scope 3) Accounting and Reporting Standard).
Category 1 calculation guidance explicitly directs reporting companies to collect suppliers' allocated
Scope 1 and Scope 2 data, bill-of-materials mass data, and cradle-to-gate emission factors, or fall back to
a spend-based method multiplying purchase value by a sector-average emission factor when supplier-specific
data is unavailable
(GHG Protocol, Category 1: Purchased Goods and Services).
For steel and iron-ore producers specifically, downstream steelmaking emissions dominate Scope 3: Anglo
American discloses Scope 3 emissions of 86.4 million tonnes CO2e, almost entirely linked to
downstream processing of its iron ore, versus combined Scope 1 and 2 emissions of roughly 1.7 million tonnes
— under 2% of the group total
(French SIF, Say on Climate Assessment — Anglo American 2026).
This asymmetry is precisely why the GHG Protocol is running a Scope 3 Standard revision
through 2026, with a Phase 1 progress update published in March 2026 addressing measurement and allocation
methods that sector bodies including the International Council on Mining and Metals (ICMM) have separately
translated into sector-specific Scope 3 reporting guidance for miners
(GHG Protocol, Scope 3 Standard Revisions Phase 1 Progress Update).
2. Commodity-specific stewardship schemes: ASI, Copper Mark, and ResponsibleSteel diverge on GHG rigor
Three commodity-specific certification schemes each layer their own climate criteria on top of GHG Protocol
accounting. The Aluminium Stewardship Initiative (ASI) Performance Standard V3 devotes an
entire principle to greenhouse gas emissions (Principle 5), requiring certified entities to establish
1.5°C-aligned GHG Emissions Reduction Pathways under Criterion 5.3, supported by an
Excel-based pathway tool and decision tree published by ASI in 2025
(Aluminium Stewardship Initiative, ASI Performance Standard).
ASI's separate Chain of Custody (CoC) Standard V2.1, revised April 2023, governs how
certified low-carbon aluminium claims are tracked and transferred through the supply chain independent of
the Performance Standard's production-site criteria
(Aluminium Stewardship Initiative, Chain of Custody Standard V2.1).
The Copper Mark's Risk Readiness Assessment (RRA) criteria guide dedicates Criterion
15 to Greenhouse Gas (GHG) Emissions specifically, sitting alongside a separate Criterion 16 for
energy consumption — splitting climate disclosure from broader energy-management practice in a way
the aluminium and steel schemes do not
(Copper Mark, Criteria Guide for the Risk Readiness Assessment).
ResponsibleSteel's International Production Standard V2.1.1 takes the most prescriptive
approach via its Principle 10, which introduces Decarbonisation Progress Levels
(DPLs) and a “sliding scale” of embodied-GHG thresholds that determine whether a site
can market itself as producing low-emission or near-zero steel — currently calibrated for carbon
steels with under 8% alloy inputs, with stainless-steel-specific DPLs under development in partnership with
SMR Group
(ResponsibleSteel, The Standard Revision: What Has Been Achieved So Far).
ResponsibleSteel is now revising Principle 10 itself, moving away from prescriptive reliance on
third-party decarbonisation models toward a corporate-and-site-level climate transition plan
requirement aligned with IFRS S2, with a public consultation beginning September 2026
(ResponsibleSteel, Latest News — Standard Revision Update).
3. Science-Based Targets: BHP and Rio Tinto commit, Anglo American cannot yet qualify
The Science Based Targets initiative (SBTi) released its Corporate Net-Zero
Standard Version 2.0 on 11 June 2026, introducing a suite of options intended to
reflect sector realities while preserving scientific rigor
(Science Based Targets Initiative, homepage announcement).
On 14 April 2026, the SBTi separately revised its minimum-ambition calculation for absolute-contraction
near-term targets, reducing the previous flat requirement of a 42% Scope 1+2 reduction and 25% Scope 3
reduction by 2030 to a linear net-zero-trajectory formula that can lower minimum ambition to roughly
21% for Scope 1, 33.33% for Scope 2, and 15% for Scope 3 depending on base year
(Anthesis, Navigating the SBTi's Revised Minimum Ambition).
Rio Tinto commits to reducing Scope 1 and 2 emissions by 15% by 2025 and 50% by
2030 against a 2018 baseline, reaching net zero by 2050, backed by a planned
$5–6 billion decarbonisation investment concentrated in the second half of the decade
(Rio Tinto, Climate Change).
Anglo American targets a 30% absolute Scope 1+2 reduction by 2030 (versus
2020) and carbon neutrality across operations by 2040, with an ambition — not yet a formal commitment
— to cut Scope 3 by at least 50% by 2040, but the company explicitly states its targets
cannot yet be verified by the SBTi because SBTi does not provide validation for companies deriving
over 5% of revenue from fossil fuels, a category that includes Anglo American's steelmaking coal exposure
pending divestment of its Australian coking-coal mines
(Anglo American, ESG Factsheet — Greenhouse Gas Emissions).
This SBTi-eligibility gap for diversified and coal-linked miners remains one of the clearest illustrations of
how sector-specific fossil-fuel exposure, rather than climate ambition alone, determines third-party
validation status across the major miners.
Current status (July 2026):
SBTi's new Net-Zero Standard V2.0 and its April 2026 minimum-ambition recalibration are reshaping how
miners set near-term targets, while Anglo American remains locked out of SBTi validation over coal exposure
even as Rio Tinto and BHP report against their own validated or self-assessed 2030/2050 pathways.
Watch: ResponsibleSteel's Principle 10 consultation (from September 2026), GHG Protocol's
Scope 3 Standard revision phases, and whether ICMM members secure a diversified-mining SBTi sectoral pathway.
Last updated: 2026-07-09
EU CBAM's Definitive Regime — Embedded Carbon Becomes a Tradeable Compliance Cost
1 January 2026 marked the end of CBAM as a reporting exercise and the start of CBAM as a financial
liability. Steel, aluminium, and cement importers must now calculate installation-level embedded
emissions, and though certificates are not purchased until 2027, the definitive regime already determines
which non-EU producers can competitively sell into the bloc.
1. The definitive regime: authorisation, reporting, and the 30 September 2027 surrender deadline
The EU's Carbon Border Adjustment Mechanism (Regulation (EU) 2023/956) entered its
definitive regime on 1 January 2026 following a transitional reporting-only phase that ran
from October 2023 through December 2025, covering cement, iron and steel, aluminium, fertilisers,
hydrogen, and electricity
(European Commission, Carbon Border Adjustment Mechanism).
From this date, only entities holding Authorised CBAM Declarant status — with an
application deadline of 31 March 2026 under Omnibus simplification transitional rules
— may lawfully import covered goods, and declarants must hold certificates covering at least
50% of cumulative embedded emissions at each quarter-end from 2027 onward
(KPMG, CBAM Implementation Timeline).
The first annual CBAM declaration and certificate surrender falls due 30 September 2027,
covering all embedded emissions from goods imported during 2026, with certificates themselves not available
for purchase from the European Commission's central platform until 1 February 2027
(CBAM Journal, EU CBAM Definitive Regime 2026).
A 50-tonne annual de minimis threshold, introduced via October 2025 Omnibus amendments,
fully exempts smaller EU importers of cement, iron and steel, aluminium, and fertilisers from all CBAM
obligations — reporting, authorisation, and certificate purchase alike — though this exemption
does not extend to electricity or hydrogen imports
(iFactory, EU CBAM Compliance Guide for Steel Exporters: 2026 Definitive Phase).
2. Pricing mechanics and default embedded-emissions values for aluminium and steel
CBAM certificate prices are set quarterly at the average auction price of EU Emissions Trading
System (ETS) allowances over the preceding period; the European Commission published the
Q1 2026 reference price at €75.36 per tonne of CO2e on 7 April 2026, with subsequent
quarterly publications scheduled for 6 July, 5 October 2026, and 4 January 2027
(CMS Law, EU CBAM: First Price Announcement and Planning Strategies).
Where verified installation-specific emissions data is unavailable, the Commission's
Implementing Regulation 2023/1773 supplies conservative default embedded-emissions values
— typically 20–40% higher than realistic figures to incentivise verified-data
submission — with the default for primary aluminium set at 16.5 tonnes CO2 per tonne,
representing the emissions profile of a coal-powered smelter, and typical converter-steel embedded emissions
falling in the 1.6–2.4 tCO2 per tonne range
(OmniMES, CBAM for Steel, Aluminium and Cement Exporters).
Non-compliance carries escalating financial exposure: failure to report costs €10–50 per
tonne of undeclared CO2 under Article 26 of the CBAM Regulation, while failing to surrender
sufficient certificates from 2027 triggers a flat €100-per-tonne penalty with no cap
plus a market-access ban on further consignments, and a March 2026 Commission proposal would add fines of
up to 4% of global turnover for repeat offences
(Coolset, CBAM Timeline, Deadlines and Phases: What to Expect in 2026).
3. Scope expansion: 180 downstream steel and aluminium products from 2028
CBAM's product scope is set to widen materially beyond raw and semi-finished metal. A December 2025
Commission proposal, subject to ongoing legislative negotiation, would from 2028 extend
coverage to roughly 180 additional steel- and aluminium-intensive downstream products
— including structural steel, industrial machinery components, vehicle parts, domestic appliances,
construction equipment, and fasteners, with steel or aluminium content averaging 79%
across the added product list
(iFactory, EU CBAM Compliance Guide for Steel Exporters).
A parallel Step 1 (2026–2027) phase already under discussion would extend
indirect emissions coverage to iron and steel, aluminium, and hydrogen, incorporate
transport-related emissions of CBAM goods, and reinforce anti-circumvention rules preventing shipments from
being rerouted through non-covered intermediate processing steps
(ResponsibleSteel, Standard Revision commentary on CBAM Step 1).
Free allocation of EU ETS allowances to domestic cement, steel, and aluminium producers is being phased out
in parallel over 2026–2033, with CBAM certificates covering a correspondingly rising
share of embedded emissions each year until full coverage in 2034, so the definitive regime's bite will
intensify well beyond its 2026 launch even without further scope expansion
(European Commission, Guidance Document on CBAM Implementation for Installation Operators Outside the EU).
Current status (July 2026):
CBAM's definitive regime is live and financially binding, with the Q1 2026 certificate price benchmark set
at €75.36/tCO2e and the first certificate surrender due 30 September 2027. Watch: the
2028 downstream-product scope expansion vote, further quarterly price publications (6 July, 5 October 2026),
and whether non-EU steel and aluminium producers accelerate decarbonisation to avoid default-value penalty
pricing.
Last updated: 2026-07-09
Standards Convergence — How ResponsibleSteel, ASI, and CBAM Are Starting to Talk to Each Other
Voluntary certification schemes and mandatory carbon border policy are no longer separate tracks.
ResponsibleSteel's own Standard Revision explicitly references CBAM's scope-expansion timeline, and its
Version 2.0 already sets global benchmarks for “near-zero” steel that regulators and buyers
increasingly treat as a de facto compliance reference.
1. ResponsibleSteel's sliding-scale GHG thresholds as a global near-zero benchmark
ResponsibleSteel International Standard Version 2.0, launched September 2022 and endorsed
by the corporate buyers' coalition SteelZero as “the most progressive and rigorous
standard to date,” introduced variable embodied-GHG thresholds — the sliding
scale — that set global benchmarks for low-emission and near-zero steel while explicitly
accounting for the differing decarbonisation starting points of emerging economies such as India and
African producers, so as not to disadvantage them in the net-zero transition
(Climate Group, SteelZero Endorses the ResponsibleSteel Standard V2.0).
Certification tiers distinguish Core Site Certification from full Steel
Certification, the latter only available to steelmakers meeting the Progress Level requirements for
both responsible materials sourcing (Principle 3) and climate/GHG emissions (Principle 10) simultaneously
(ResponsibleSteel, Launch of International Production Standard Version 2.1).
The current Version 2.1.1, in force since October 2024, remains active for certification
purposes while Version 3.0 undergoes its multi-year revision process, running from 2024 through a targeted
2027 completion with a transition period before full implementation
(ResponsibleSteel, Standard Revision).
2. Chain of custody meets carbon claims: preventing double counting across borders
ResponsibleSteel's 2024 public consultation on a new downstream Chain of Custody standard
directly addresses a problem CBAM regulators also face: preventing double-counted or unverifiable carbon
claims as steel and aluminium move through multi-tier international supply chains. ResponsibleSteel's
proposed physical-constraints criteria explicitly exclude vague or indirect linkages — such as generic
handling of “iron ore” or “slabs” that cannot be robustly traced — from
qualifying for low-carbon certification claims, and Environmental Attribute Certificates (EACs) are
restricted from covering incremental efficiency improvements at existing facilities where no fundamental
production-process transformation occurred
(ResponsibleSteel, Public Consultation on Downstream Chain of Custody Standard).
This mirrors ASI's parallel Chain of Custody Standard V2.1 for aluminium, which similarly separates
physical-material tracking from production-site performance certification, and signals that commodity
stewardship bodies are converging on chain-of-custody rigor as the connective layer between site-level
decarbonisation and downstream carbon claims used in CBAM declarations
(Aluminium Stewardship Initiative, Chain of Custody Standard V2.1).
3. IFRS S2 alignment and the push toward comparable, auditable disclosure
ResponsibleSteel's climate-criteria revision explicitly aims for alignment with IFRS S2
(the International Sustainability Standards Board's climate-related disclosure standard) while retaining
flexibility for different regional and operating contexts, alongside improved intensity-based disclosures
designed to support comparability across steelmakers of different scale and geography
(ResponsibleSteel, Latest News — Standard Revision Update, June 2026).
Working Groups and Technical Advisory Groups convened from September 2025 through June 2026 to review
proposed revisions, with a further public consultation slated for September 2026 — timing that
deliberately follows the maturation of CBAM's definitive-regime reporting obligations so that
ResponsibleSteel's revised disclosure architecture can reference real-world CBAM compliance data rather than
design in a vacuum
(ResponsibleSteel, Standards Development timeline).
For miners and metals producers navigating this landscape, the practical effect is that GHG Protocol
Scope 1/2/3 accounting, commodity-specific stewardship certification (ASI, Copper Mark, ResponsibleSteel),
SBTi validation, and CBAM compliance reporting are converging into a single interlocking disclosure
obligation rather than four independent voluntary and mandatory tracks.
Current status (July 2026):
Voluntary stewardship standards (ResponsibleSteel, ASI) and mandatory carbon border policy (CBAM) are
converging on shared chain-of-custody and IFRS S2-aligned disclosure logic, even though they remain legally
distinct regimes. Watch: ResponsibleSteel's September 2026 consultation, ASI's next
Performance Standard revision, and whether CBAM's 2028 downstream-product expansion formally cross-references
any private certification scheme as a compliance shortcut.