Step 1. Establish Strong Company Management Systems

Threat financing (includes conflict risks as per the OECD Annex II)

Systematic or widespread human rights abuses associated with the extraction, transport or trade of gold, including:

• Any forms of torture, or inhuman and degrading treatment
• Forced or compulsory labour
• Worst forms of child labour
• Widespread sexual violence or other gross human rights violations
• War crimes, crimes against humanity or genocide.

Direct or indirect support to illegitimate non-state armed groups, or public or private security forces (“illegitimate non-state armed groups, public or private security forces”)⁷ which:

• Illegally control mines, sites, traders or other intermediaries, and transport routes through the
  supply chains; or
• Illegally tax or extort money or minerals through the supply chains.

Bribery and fraudulent misrepresentation of the origin of gold.

Non-compliance with taxes, fees and royalties due to governments related to mineral extraction, trade and export from Conflict-Affected and High-Risk Areas (CAHRAs).

Money laundering or terrorism financing.

Contribution to conflict.

ESG Factors

Compliance with environmental, health, safety and labour regulation in country of operation and/or company policy.

Environmental management, including:

• Air, water, land pollution and incident management plans
• Water stewardship, especially in water scarce and stressed areas
• Unauthorised sourcing from World Heritage Sites and Protected Areas.

Storage, handling, and disposal of hazardous chemicals, including mercury and cyanide.

Note: LBMA recognises that mercury is used mainly in Artisanal and Small-Scale Mining (ASM) sources and therefore does not ban such supply chains. Instead, LBMA requires Refiners working with such artisanal supply chains to assist them in establishing processes to use mercury in a safe manner and to limit negative impacts on the environment and health and safety, and to find alternative solutions to mercury.

Refiners should engage with upstream producers to encourage them to comply with the International Cyanide Management Code.

Management of labour issues, including remuneration, working hours, collective bargaining, discrimination, diversity, disputes and safeguarding of workers.

Community engagement and management programmes (land acquisition and community resettlement, cultural heritage sites and indigenous people, closure planning and safeguarding of vulnerable populations).

Management of business integrity and ethical conduct, and supporting the implementation of relevant initiatives such as the Extractive Industry Transparency Initiative (EITI).

Minimum criteria for internal (or external) supply chain policy document:

• Scope
• Organisation and responsibilities
• Identification and assessment of threat finance risks and consideration of ESG factors, including all those defined above
• Detailed and meaningful Know Your Counterparty (KYC) and supply chain due diligence processes that, at a minimum, meet RGG Step 2.1 requirements
• Transaction monitoring processes that, at a minimum, meet RGG Step 2.1 requirements
• Criteria for high-risk supply chains that, at a minimum, meet RGG Step 2.2 requirements
• KYC and supply chain due diligence record maintenance requirements
• Employee training programme.

Board accountability should include, but is not limited to:

• Having the necessary competence, knowledge and experience, or utilising external expert advisors to provide oversight of the supply chain due diligence framework and outcomes.
• Ensuring internal accountability for the effectiveness of the supply chain due diligence policies and processes.
• Assessing whether effective structures and communication processes are in place for critical information, including the company policy, to reach relevant employees and gold-supplying counterparties.
• Regularly, and at a minimum annually, assessing the effectiveness of supply chain due diligence policies and processes to drive continuous improvement.
• Assessing whether an appropriate Compliance Officer has been appointed to take responsibility for all matters regarding the gold supply chain.
• Assessing whether the Compliance Officer has sufficient support in terms of the availability of resources necessary to support the operation and monitoring of the supply chain due diligence processes and systems.

Compliance Officer’s responsibilities should include, but are not limited to:

• Reviewing the gold supply chain due diligence processes and systems to meet the objectives of the RGG and the Refiner’s risk management appetite.
• Ensuring effective structures and communication processes are in place for critical information, including the company policy, to reach relevant employees and gold-supplying counterparties.
• Ensuring the availability of sufficient resources (including capacity and experience) necessary to support the operation and monitoring of the supply chain due diligence processes and systems.
• Training employees with respect to supply chain risks (including threat finance and ESG) and preparing and updating of the Refiner’s gold Supply Chain Policy and procedures.
• Reviewing Know Your Customer (KYC) files and risk classifications, and requesting additional documentation or information, as necessary.
• Ensuring that appropriate measures are executed in the case of high-risk supply chains or transactions.
• Providing proper and timely information for the Board to perform its duties.

The traceability information should include, but is not limited to:

• Proof of mining origin for primary product (e.g., official government-issued certificate of origin, audited chain of custody documentation, blockchain traceability records, formal packing list).
• Proof of origin for Recycled Gold and Grandfathered Stocks (e.g., audited chain of custody information, blockchain traceability records, formal invoices or packing lists).
• A unique reference number assigned to each input and output in order for any tampering to be evident.
• Type of gold received (including source):
  o Mined Gold: LSM, ASM, Mining By-product or gold sourced from owned mines.
  o Recycled Gold: unprocessed, melted, Industrial By-product.
  o Grandfathered Stocks.
  
• Weight and assay: declared and processed.
• Export and import form for high-risk transactions, if applicable.
• Shipping/transportation documents (waybill/airway bill, pro forma invoice, if applicable) to establish chain of custody from origin to refinery.
• Date of arrival at the refinery and date of assay finalisation.

Refiner’s responsibilities include, but are not limited to:

Policy
Refiners should require the gold-supplying counterparty to commit to either:

• the Refiner’s gold Supply Chain Policy; or
• the counterparty’s own gold supply chain policy, which at a minimum should be consistent with the OECD Annex II.

Contracts
The Refiner’s gold Supply Chain Policy or its requirements, or the counterparties’ own OECD Annex II aligned gold supply chain policies or requirements, must be incorporated into contracts and/or agreements between the Refiner and its gold-supplying counterparties.

Capacity building
Where appropriate, Refiners should assist in establishing processes to promote responsible mining and sourcing practices throughout the supply chain and assist gold-supplying counterparties or prospective suppliers, including legitimate ASM and local traders, in improving their supply chain practices. For example, Refiners should communicate their expectation and provide guidance or share good practices during on-site visits. Refiners may also consult and work together with national and industry authorities, local NGOs, human rights institutions, donor agencies and large-scale mining, etc., to support gold supplying counterparties.

The grievance mechanism should be based on, but not limited to, the following principles:

• Accessible: The mechanism should be known and usable by all intended users without fear of reprisal, and should include considerations for language, literacy, costs, physical location and technology.
• Independent: The mechanism should have a formal and independent oversight structure (e.g., the Refiner’s Compliance Department) that ensures parties cannot interfere with fair conduct.
• Respectful: All complaints should be treated seriously and with respect.
• Transparent: The mechanism should have procedures to keep parties informed about the progress of their grievances through each stage and should provide sufficient information to build confidence in its effectiveness and meet any public interest reporting requirements.
• Contribute to continuous learning: The mechanism should provide a source for identifying lessons for improving both the mechanism and preventing future grievance and harm.