LBMA Annual Report 2023
Sustainability and Responsible Sourcing
Gold plays a unique role in the global economy in stimulating economic growth, protecting the financial security of nations, communities and families, and enabling advances in medical, environmental and communication technologies.
Public trust is fundamental to the many positive contributions that gold makes to socio-economic progress. At the heart of this effort lies LBMA’s Responsible Sourcing Programme. In the face of a constantly shifting world of geopolitics, tightening regulatory environments and expanding public expectations of responsible business practices, LBMA can never be complacent.
One of the signature initiatives of 2023 was the launch of a new three-year Sustainability and Responsible Sourcing Strategy (2024-2026) to guide our thinking and work in this area. It is an ambitious agenda to help drive a more sustainable industry, but it is not something LBMA can deliver on its own. All actors from ‘rock to ring’ – including industry partners, governments and other official bodies – must play their part.
As with earlier iterations, the Strategy sets out five areas of focus:
- Strengthen trust and integrity of the assurance and oversight system for the responsible sourcing of precious metals,
- Encourage the share of responsible ASM gold in the market,
- Strengthen sustainability, integrity, and trust in the gold value chain,
- LBMA’s own sustainability,
- Enablers that will support a sustainable precious metals industry.
The latter three focus areas support the broad commitments set out in the Sustainability Declaration agreed by industry partners in Lisbon in 2022. By going beyond the traditional responsible sourcing and market requirements for GDL Refiners, LBMA will look to the wider sustainability agenda – the UN Sustainable Development Goals, climate change, Green House Gas emissions, biodiversity and human rights issues – to examine how LBMA Refiners, partners, and even itself, can contribute to our collective efforts for better social and environmental outcomes.
Further details of how LBMA plans to identify appropriate and reasonable objectives and timelines for delivery will be shared in early 2024.
Improvements to the Responsible Sourcing Programme
On a more tangible level, LBMA is already making progress on the other focus areas. In recognition of the critical role the assurance programme plays in assessing and validating Refiners’ conformance with the Responsible Gold Guidance (RGG), significant time and resources were invested in strengthening the training and oversight of assurance providers recognised by LBMA.
This includes the release of a suite of guidance documents to support assurance providers before, during and after their annual engagements with GDL Refiners, such as:
- An Auditor Toolkit to guide assurance providers, particularly in instances when there is a disagreement or need to push for greater clarity and comfort about a Refiner’s policies and practices.
- A pre-assurance checklist that providers must submit to LBMA outlining such things as their findings from open-source research conducted on the auditee Refiner prior to their site visit, their proposed sample size of records they plan to test, and a list of documents they will review during the assurance.
- A Guide to Completing Refiner Data and an amended Refiner Data Collection Form, designed to improve the accuracy and analysis of Country of Origin data submitted by Refiners to the LBMA as part of their annual assurance reporting.
In addition to supporting the policy architecture of assurance providers, LBMA overhauled the annual, mandatory training programme by creating our own in-house e-learning platform. This training familiarises assurance providers with the requirements outlined in the RGG and the Third Party Audit Guidance, but also incorporates case studies based on sourcing vulnerabilities that arose during or outside of this year’s assurance process. The training also tests the competency and performance of assurance providers, allowing for their removal should they score below the minimum 70% pass threshold.
This year LBMA further improved the oversight of the assurance process by shadowing six GDL refiners during their annual engagements. These shadows not only provide the Responsible Sourcing team with first-hand insights into how assurances are conducted but highlight possible areas of improvement to be incorporated in future trainings.
In September LBMA also introduced version 2 of the Responsible Silver Guidance, in place since 2017. Rather than introducing wholesale changes, the revision focused on aligning the standard to the higher requirements outlined in
Responsible Gold Guidance version 9. One key change that was made was to remove the De Minimis Threshold, which had previously excluded material containing less than 15% silver by weight (kilograms) from the scope of the Silver
Guidance.
EU Conflict Minerals Regulation
Recognition under the European Union Conflict Minerals Regulation remains a high priority for LBMA.
This process commenced in January 2020, but due to the challenges of COVID-19 was significantly delayed. As the original application was based on the Responsible Gold Guidance version 8 – as version 9 was not launched until the end of 2021 – LBMA provided an updated application to the EU earlier this year that reflects all the developments made to the programme by LBMA in recent years.
The second assessment is slated to begin in early 2024.
Re-imagining ASM
Building on the Artisanal and Smallscale Mining (ASM) Feasibility Study conducted in 2022, LBMA moved to establish a multi-stakeholder ASM Taskforce comprised of Refiners, World Gold Council members, and NGOs specialising in creating legal ASM supply chains. Seven promising ASM producer countries—Colombia, Cote d’Ivoire, Ghana, Peru, Philippines, Senegal and Tanzania— were chosen for desk-based research to assess their suitability for engagement with LBMA refiners.
A draft ASM Toolkit and Sourcing Framework were also completed by the end of 2023, with a view to increasing the volumes of legal ASM production entering GDL refiners. Looking ahead to 2024, LBMA intends to begin on-the-ground due diligence visits to select producer countries listed above, and launch a Sourcing Framework GDL Refiners and their ASM partners can begin to pilot.
Since its launch in January 2020, the monthly Responsible Sourcing Newsletter continues to keep the market up to date on key responsible sourcing issues or industry developments. Among the topics covered were unprecedented sourcing threats LBMA and GDL Refiners had to contend with such as the Russian invasion of Ukraine, a mercenary group operating in gold-rich but unstable countries in Africa, illegal miners in the Brazilian Amazon, and forced labour concerns in China.
Readers are encouraged to consult LBMA’s Sustainability and Responsible Sourcing Report for further details of the Programme’s activities in 2023.