Responsible Gold Guidance V9

Introduction

Purpose of the Document

The Responsible Gold Guidance (RGG) outlines the responsible sourcing requirements for all LBMA refiners producing Good Delivery Gold bars (Refiners). Refiners must demonstrate conformance with all sections of this Guidance and the associated Refiners Toolkit to remain on the LBMA Good Delivery List (GDL). An LBMA Responsible Gold Certificate is only issued to GDL Refiners that have successfully passed LBMA’s annual responsible sourcing review process, supported by an independent assurance on conformance with the RGG. An organisation applying to be an LBMA Good Delivery accredited Gold Refiner must first implement this Guidance and pass an annual assurance covering a 12-month period to support their application process.

Each Refiner must apply the RGG proportionally to its business activities and to those involved in its gold supply chains. Proportionate application does not mean different standards for different institutions – it is a recognition of the differing levels of size, complexity, nature of engagement and sophistication of gold producers and refiners worldwide.

Refiners retain ultimate responsibility for the scope and quality of their due diligence activities, for the actions taken to respond to actual adverse impacts or the identified risks of adverse impacts, and for public reporting on the steps undertaken to protect their supply chains.

Applicable Laws

However, the overarching requirement of the RGG is that all Refiners must be aware of, and comply with, the laws, rules and regulations applicable to them and the precious metals market in each jurisdiction in which they do business (Applicable Laws). This guidance does not provide a legal defence to a violation of any Applicable Laws. It is expected that all parties directly involved in the gold supply chain, including upstream producers, comply with all Applicable Laws.

Long-lasting relationships

Refiners should also forge close long-lasting relationships with all relevant stakeholders, in order to provide material benefits to everyone concerned. Best practice is for Refiners to report material risks in their supply chains and mitigate these risks by developing programmes where short-term actions support a long-term future by attracting and retaining upstream and downstream counterparties, and by having a clear focus on the durability of supply chains.

LBMA encourages initiatives facilitating responsible and sustainable supply chains for all forms of mining in areas considered as Conflict-Affected and High-Risk Areas (CAHRAs). Refiners are strongly encouraged, with reference to Appendix 1 of the OECD Due Diligence Guidance Gold Supplement,⁶ to consider measures to create economic and development opportunities for Artisanal and Small-Scale Miners and assist legitimate Artisanal and Small-Scale Miners to build secure, transparent and verifiable gold supply chains from mine to market. LBMA encourages Refiners to work together with national governments, central banks, donor agencies, industry associations and large-scale mining to support Artisanal and Small-Scale Mining (ASM), as appropriate. However, Refiners must ensure that no gold from ASM or Large-Scale Mining (LSM) is sourced from an area designated as a World Heritage Site. Refiners must ensure when sourcing from a location designated by a national government as ‘Protected’ that such sourcing is undertaken within the local regulatory or legislative framework.

Five-Step Due Diligence Framework

The RGG is based on the OECD’s Five-Step due diligence framework for sourcing minerals from Conflict-Affected and High-Risk Areas, and the OECD Due Diligence Guidance Gold Supplement.

Figure 3: OECD Five-Step due diligence Framework

Figure 4: LBMA RGG Five-Step Due Diligence Framework

Harmonisation of Responsible Sourcing Initiatives

LBMA is committed to the harmonisation of its requirements with other responsible sourcing initiatives or anti-money laundering requirements that meet, or exceed, those laid out in the RGG (other initiatives).

Compliance with international regulations

LBMA assurance deliverables may, at a minimum, be used to demonstrate compliance with or implementation of the following recommendations or requirements:

OECD Due Diligence Guidance: The 2018 OECD alignment assessment conducted by an independent third party has concluded that LBMA Guidance is closely aligned to the OECD Due Diligence Guidance and its Gold Supplement. This version further strengthens alignment between the RGG and the OECD Guidance.

Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act: Dodd-Frank Section 1502, including any rules issued by the United States Security and Exchange Commission (US SEC), indicates that manufacturers can meet US requirements by relying on Refiners that have been certified by “industry groups’ ‘conflict-free’ designation programmes” such as LBMA’s.

European Union Conflict Minerals Regulation: The Regulation came into effect on 1 January 2021.

Recognised responsible sourcing initiatives

LBMA’s intention is to not require duplication nor re-performance of existing responsible mining and sourcing audit arrangements. Independent audit, assurance or certification carried out under other initiatives may be used as evidence to assess conformance with relevant aspects of the RGG.

It must be noted that the scope of these initiatives may not completely address the requirements of the RGG. The onus is on the Refiner to assess which aspects of the RGG are met by other initiatives and to address the remaining areas appropriately.

LBMA Programme Governance

LBMA uses multiple approaches to ensure the quality and integrity of the Programme. These include:

Regular publication and updates of guidance documents, toolkits and templates to incorporate evolving best practices.

Provision of training and additional resources for members and Assurance Providers.

Ongoing review and enforcement of approved Assurance Provider requirements.

In-house review of Refiners’ Assurance Reports.

Proactive monitoring of gold activity in Conflict-Affected and High-Risk Areas (CAHRAs).

RGG effective date

Refiners shall start implementation of RGG Version 9 from 1 January 2022 and will have until 31 December 2022 to fully implement all the new requirements. New requirements are also applicable to existing supply chains and must be implemented when due diligence is revisited as per Step 2 of the Guidance. 2022 is considered the year of implementation, with the expectation that the first audits against RGG Version 9 are due for the year ending 31 December 2022.

GDL certification and quality review

On an annual basis, LBMA undertakes a risk-based review of the Refiner’s compliance and assurance deliverables. This is supported by LBMA’s internal Country of Origin data analysis and the continuous Incident Review Process (IRP). An IRP is launched when LBMA becomes aware of allegations of criminal activity and/or potential serious breaches of the RGG. The Refiner may be requested to provide additional information or detail on specific issues or aspects identified by LBMA. The Refiner’s GDL certificate is only granted once all LBMA reviews and related queries have been resolved.

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