Recasts, adds detail and background

April 23 (Reuters) - The London Metal Exchange $(LME.AU)$ is exploring the potential for producing premiums that will reflect the sustainability of brands that can be deliverable against its metal contracts, it said on Wednesday.

Energy-intensive metal production can have a major impact on the environment because of the carbon and other pollutants that are emitted. Some end-consumers are willing to pay a premium for sustainable practices that cut emissions.

"By making a sustainability price differential public, the value attached to sustainable metals will be transparent and could support the development of the market for sustainable metals," the exchange said in a release.

"The LME is discussing its proposals with a range of physical market stakeholders, and will provide further progress updates in due course."

The LME, the world's largest and oldest forum for trading metals, partnered with digital platform Metalshub for an initiative launched last year to develop a price discovery mechanism for low-carbon nickel.

It is now planning to launch a broader series of sustainable metal premia for the aluminium, copper, nickel and zinc traded on its platforms, underpinned by a robust assessment process.

"We welcome the LME's proposal as a much-needed move to enable the proper pricing of low-carbon, sustainable products," said Nick Stansbury, Head of Climate Solutions, Asset Management at financial services company L&G.

"We believe transparent pricing of sustainable materials is critical to incentivising investment into transition technologies in the mining industry."

The exchange will aim to establish an administrator to set the rules, policies and process for the sustainability premia.

Its proposed sustainability criteria would include carbon footprint thresholds, calculated with a metal-specific carbon footprint methodology, and third-party sustainability assurance.

(Reporting by Anjana Anil in Bengaluru and Pratima Desai in London; Editing by Kirsten Donovan)

((Anjana.Anil@thomsonreuters.com;))