Responsible Gold Guidance V9 Draft Consultation

Summary of Key Changes

Format of Document

Five Steps framework: the RGG version 9, like the previous versions, has been organised in accordance with the OECD Five-Step due diligence framework. Each Step starts with a description of the objective of the Step, which is then followed by requirements and sub-requirements. Each requirement has been stipulated as a ‘must’ and the sub-requirements have been included in a tabular format and stipulated as ‘shoulds’. Finally, the headings have been edited for conciseness, but their purpose has been retained.

Otherwise, the following changes should be noted under the section, titled ‘Introduction’.

‘About LBMA’: a two-page preface has been incorporated as a standard overview in all Responsible Sourcing documents.

Definitions: these have been updated so that they are consistently applied across all Responsible Sourcing documents as relevant. Key updates include:

  • Artisanal and Small-Scale Mining: specifically addresses small-scale mining
  • Environment and Sustainability: has been updated to Environment, Social and Governance (ESG) to be in line with industry requirements
  • Gold sources: a breakdown of various gold sources, including Mined Gold, Recycled Gold, and Grandfathered Stock has been provided
  • Human rights: this definition has been extended to cover women, children, persons with disabilities, minorities and other groups
  • Intermediate Refiner: this term has been included to denote non-GDL refiners
  • Protected Area: this term has been included to cover national parks, wilderness areas, community conserved areas, nature reserves, etc.
  • Ultimate Beneficial Owner: the definition has been amended to 10% control to align with OECD and emerging industry practice.

Sections: these have been extended with further detail on the purpose of the RGG version 9, as well as more information on the Responsible Sourcing Programme’s governance, including the requirement for special audits and requests for information.

Step 1

  • Threat financing and ESG risks: have all been grouped in one overarching and upfront section so that users can understand from the outset which risks are included in the scope of the due diligence.
  • ESG: includes topics for primary gold supply chains as the most material source of ESG risks in the supply chain.
  • Human Rights Abuses: is included in the threat financing table and covered within health, safety, labour and community aspects under ESG.
  • Senior management: this has been updated to Board or Board committee as board-level oversight is deemed critical.
  • Compliance Officer: there is an explicit requirement for the Compliance Officer to report to the CEO and/or Board.
  • Payment through official banking channel: this has been extended to stipulate that no cash transactions are permitted, except between mine site and national level aggregator only when dealing with ASM. Any exception requires approval.
  • Proof of origin: examples of supporting evidence have been included for Mined, Recycled, Grandfathered Gold.
  • Export and import forms for high-risk transactions: have been included.
  • Shipping / transportation documentation: have been included.
  • Suppliers’ policy commitment: suppliers are encouraged to align policies to OECD Annex II and incorporate the ESG risks outlined in Step 1.1.
  • Contracts: Refiner’s policy must be incorporated into contracts.
  • Capacity building: has been extended to include consultation with national and industry authorities.
  • Principles for grievance mechanism: have been included.

Step 2

  • Integrated supply chain due diligence process: ‘due diligence starts with the origin’ has been replaced with a three-pronged integrated approach including location risks*, supplier risks** and type of material risks***.
  • Recycled Gold: now clarifies that a supplier assessment is required to cover all precious metals activities carried out by the counterparty rather than the Refiner’s direct supply chains only. Aligned to OECD Recycled Bullion Definition requirements.
  • Monitoring of transactions: has been moved to the risk identification section and consolidated for Mined and Recycled Gold.
  • Zero-tolerance risks: a definition of zero-tolerance risks identified from the initial due diligence has been included.
  • High-risk criteria: have been broken down by Mined Gold and Recycled Gold, with both defined per location, supplier and type of material risks.
  • To note: references to medium risk have been removed.
  • ESG criteria: have been incorporated into risk classification criteria.
  • On-site visit requirements: have been consolidated into one section.
  • EDD measures: have been broken down into high-risk LSM, ASM, Recycled Gold from Intermediate Refiner and Recycled Gold from other high-risk sources.
  • Recycled Gold from Intermediate Refiners: now requires independent assurance from an OECD-aligned scheme.
  • Recycled Gold from other high-risk sources: EDD requirements have been clarified.

Step 3

  • Presentation has been updated for added clarity on when to terminate, suspend and continue with improvement plan.
  • Presentation has been updated for added clarity on requirements.

Step 4

  • Independence and objectivity: is the responsibility of the Refiner’s board or board committee / audit committee to ensure assurance provider’s independence.
  • Assurance provider rotation: should be aligned to EU mandatory audit firm rotation of 10 years on a comply to explain basis.
  • Assurance objective: now clarifies that the assurance conclusion is on the Refiner’s annual reporting on activities during the year and management’s overall conclusion is on meeting the objectives of the RGG.
  • Assurance standard: has been amended to allow reasonable level of assurance only each year.
  • Assurance deliverables: presentation has been updated for clarity on public and private documents.
  • Multi-site assurance: guidance has been included.

Step 5

  • Reporting objective: to include sufficient detail on supply chain due diligence policies, systems, processes and performance, and reflect the dynamic due diligence process each year.
  • Reporting deliverables: presentation has been updated for clarity on public and private reporting.
  • Refiner’s Compliance Report: minimum requirements now also include:
    o Identity of refiner and local exporter in high-risk locations
    o Details and progress of risk mitigation strategies for high-risk suppliers
    o Refiner’s high- and medium-risk non-conformances with the RGG.
  • Immediate reporting: of zero-tolerance incidents and delisted suppliers / auditors also included.

*Location risks: examples of sources of information have been provided for appropriate location risk assessment.

** Supplier risks: now stipulates that the KYC questionnaire in Refiner’s Toolkit must be used and clarifies the requirements by including more detail and providing examples.

*** Type of material risks: these are broken down into LSM, ASM and Recycled, with notes on Mining By-products, own mines and grandfathered material provided to cover all material bases. ESG requirements are aligned to Step 1.1 risks. Recognition of other initiatives which may be used by Refiners as evidence to support due diligence practices has been included. Applicable standards are outlined in Annex 1.