July 26, 2024

Responsible Sourcing Newsletter: July 2024

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Continuing our series of responses to Ask Responsible Sourcing, we look this month at two questions that relate to the filing of assurance reports and the KYC process for Refiners that are part of a larger corporate group.

The first question asks:

“We have several refineries producing gold and/or silver that are on the LBMA Good Delivery List (GDL). Instead of producing a compliance report for each refinery, could we produce one integrated compliance report covering all our refineries? And if so, as these refineries also produce LME brands, could we produce one integrated compliance report covering all the refineries and brands?”

The second asks:

“As a typical reaction by suppliers to our KYC questionnaire, they sometimes decline to answer to our KYC because their supply chains are assured by other programmes. How should we refiners react to such suppliers?”

Let's answer them in order.

Among Refiners on the Good Delivery List (GDL), there are several refiners that belong to the same corporate structure. In such instances, it is not uncommon to find that the company implements integrated corporate-wide management systems across Refiners (i.e. due diligence and compliance procedures), the details of which are reflected in the annual assurance reports of each refiner. This is perfectly acceptable. However, LBMA accredits individual refiners, not the parent company. There are several reasons for this but most importantly each Refiner has different supply chains, which pose different risk factors that might have to be mitigated. One integrated compliance report would not provide LBMA and the broader market sufficient detail and comfort regarding the more individual supply chain risks and potential enhanced due diligence or risk mitigation efforts of the various operations, including how each entity may have addressed their past non-conformances.

With respect to the cross-recognition agreement with the LME, the news is more optimistic. It is true that multi-metal Refiners (those processing both precious and base metals) are able to avoid audit duplication by using the Responsible Gold Guidance (RGG) as the basis for the multi-metal assurance engagement. There are two reporting options: if Assurance Providers include sufficient information on each metal in scope, one Assurance Report will suffice; however, if that condition is not met, then separate Assurance Reports must be issued for each metal in scope.

The Refiner carries the ultimate responsibility for assessing the security risks of their supply chain. If they do not have full line of sight of the material they source, they are opening themselves up to unnecessary reputational risk. The requirement is that all GDL Refiners are conforming to all the requirements of the RGG and must carry out an assurance under the LBMA Programme.

As always, we welcome your feedback and encourage you to continue to send us any questions or queries through Ask Responsible Sourcing.

Questions can be submitted by using this form or scanning the QR code. Questions will be published (on an anonymised basis) with answers appearing in the next Newsletter.

Looking Ahead: Shifts in the Regulatory Landscape

As we navigate the mid-point of 2024, the regulatory landscape continues to evolve with significant momentum, reflecting global economic and political shifts. The global stage is abuzz with sustainability initiatives as Europe accelerates its regulatory efforts before the summer and election season. Across the Atlantic, the Biden administration mirrors this urgency, advancing green policies ahead of the November elections. This period of intense focus on sustainability, transparency and accountability brings substantial updates from both international and regional bodies.

This information was originally published in this month’s Regulatory Affairs Newsletter, but because of the overlap with Responsible Sourcing we are highlighting it to support Refiners' awareness to these approaching regulatory developments which could have significant implications for their operations.

AP Training

On the back of a successful Assurance Provider drop-in session on 9 July, we are pleased to announce that our e-learning platform will be opening mid-October and case study sessions will be held during the final week of November. Please note that this training is mandatory for all current and incoming practitioners conducting assurance engagements for GDL Refiners. Further details will be released in due course.

Alan Martin
Head of Responsible Sourcing, LBMA

The Responsible Sourcing Newsletter will break for August and return at the end of September.