July 17, 2020

Responsible Sourcing update

Continuously improving standards

As the Global Authority for Precious Metals, LBMA is committed to maintaining the highest due diligence standards for sourcing material. A fundamental aspect of the Good Delivery List is that gold (and silver) processed through accredited refiners can be trusted to be responsibly sourced. This chain of integrity is vital to maintaining confidence in the global market and has been the foundation for the continuous development of our Responsible Sourcing Programme (RSP).

The RSP implements the five-step framework for risk-based Due Diligence given in the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (2010) and the requirements detailed in the OECD Gold Supplement (2012). LBMA was actively involved in drafting the Gold Supplement and continues to support the work of the OECD in the area of supply chain due diligence and related projects.

Vital to the credibility of the LBMA standards is their broad scope, which includes environmental issues; avoiding material from conflict-afflicted areas; and combating money laundering, terrorist financing and human rights abuses, including child labour. Refiners are independently audited every year and are required to report publicly (audits are made available on the LBMA website). The audits, among other aspects, focus on the management systems and controls, and whether these are robust and appropriate to addressing the refiner’s risk profile. We also encourage Good Delivery refiners to constantly review their processes to make sure they address their risk profile, and to draw on intelligence provided by credible organisations to inform their due diligence.

These annual audits, conducted by LBMA Approved Service Providers, may be supplemented by special audits if and when material new information or evidence becomes available. Also, LBMA will assess such information/evidence and make further enquiries, as required, or if warranted, launch a formal Incident Review Process.

The LBMA programme is designed to be a holistic process that engages all stakeholders and recognises that the audits are a part of a wider engagement. Nevertheless, LBMA cannot tackle responsible sourcing issues alone. We are continuously engaged with other parties such as the OECD, law enforcement and NGOs in order to leverage influence in jurisdictions where standards may be weaker than that set out in the OECD Guidance.

LBMA also recognises that more needs to be done. We have always been committed to the ongoing development of the RSP and our mission is to drive continuous improvement of responsible sourcing standards and business practices to ensure a sustainable precious metals market. To achieve this, we have a three-year action plan focused on improving transparency and the integrity of the industry as a whole. This plan builds on the successes of the past and looks to create open, constructive dialogue about the outstanding challenges facing the precious metals industry. That includes a focus on improving audit standards. LBMA welcomes the constructive engagement of all stakeholders in this process.