Responsible Sourcing Newsletter: May 2021

Spotlight on Brazil: ESG and Responsible Sourcing

Recently we have been keeping an eye on legislative developments in Brazil and their implications for responsible sourcing.

Brazil’s Lower House overwhelmingly passed a Bill on Wednesday, 12 May that withdraws environmental impact assessments and licensing for development projects, including mining in protected areas of the Amazon. The Bill — currently being debated by the Senate — is backed by President Jair Bolsonaro and the powerful agribusiness lobby who champion it as a way to slash red tape on environmental assessments and licensing.

Opponents are convinced the new legal framework will inevitably fast-track approval of high-risk projects, leading to greater deforestation of the Amazon and an escalation of violence against indigenous communities, like the Yanomami people. Already there has been a noticeable uptick in armed and violent altercations between miners and the Yanomami (see News Roundup below).

That the Amazon —the world’s lungs as environmentalists call it — is under threat is not new. But current developments raise several issues from a responsible sourcing perspective and could well serve as a test case for how LBMA refiners respond to the Environmental Social Governance (ESG) requirements gathering steam around them.

LBMA RGG v9 and ESG

How valid is the legal right to exploit a resource in an environmentally endangered area, especially when it lacks social license from endangered indigenous communities? How do LBMA refiners mitigate — rather than run from — risks associated with gold sourced in the Amazon? And how does the gold industry respond to new forms of conflict beyond the well-worn parameters set by the civil war in the Democratic Republic of Congo, which, as discussed in the last issue, has defined much of the responsible sourcing debate of the last decade?

With the current revision of the Responsible Gold Guidance (RGG) and its added emphasis on ESG, questions like these are not moot. Rather they strike at the heart of how the ethical sourcing landscape is continually shifting and evolving; and the need for LBMA (and its members) to proactively keep pace.

One key change in the draft RGG calls on refiners to encourage gold supplying counterparties to commit to their own gold supply chain policy. This policy should not only be consistent with Annex II of the OECD’s Due Diligence Framework but govern common ESG risks such as sourcing from environmentally protected areas or instances where tensions exist with local communities and indigenous peoples

These changes are a necessary part of the continuous improvement that underpins the OECD Due Diligence framework, as well as LBMA’s commitment to responsible sourcing. Public consultations of the RGG revision will begin in June and we once again encourage you to reach out to us if you are interested in participating. Reach out to us at alan.martin@lbma.org.uk if you are interested in participating.

LBMA Webinars - ESG & Mining

Watch now, host Neil Harby (Chief Technical Officer, LBMA), Grant Beringer (Group Sustainability Executive, Barrick Gold Corporation) and Edward Bickham (Senior Advisor, World Gold Council) discuss what's currently going on in the world of ESG and Mining.

LBMA Responsible Sourcing Programme Update

LBMA has published a mid-year update to outline the progress made on its 'Five Key Strategic Focus Areas' as well as the latest on 2020 audits.

These five key areas – value chain accountability, advancing standards, transparency, audit programme, and Artisanal and Small-Scale Mining – underpin the priorities for the programme over the next three years and are key to building long-term trust and credibility in the industry globally.

Central to LBMA’s strategy is engaging with stakeholders, and this year will continue to see a focus on several initiatives which require close collaboration with various actors in the supply chain, as well as with other industry programmes.

Read the full update here.