CEO’S Report: Creating Responsible Global Demand

Ruth Crowell, CEO

Over the next three years, 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 developed a three-year action plan focused on improving transparency and the integrity of the industry as a whole. Our strategic plan for Responsible Sourcing builds on the successes of the past and looks to create open, constructive dialogue about the outstanding challenges facing the precious metals industry.

Our Three-Year Strategic Action Plan focuses on LBMA’s Refiner Audit Programme itself as well as global industry challenges. Work on our Audit Programme has three main sections: Environmental &Sustainability, Public Reporting & Communication and Enhanced Auditor Training. We are also investing in technology to see how it can help us deliver on our transparency and integrity objectives through our Gold Bar Integrity initiative.

As a champion for further industry change, there are two main priorities. The first is creating global Responsible Sourcing standards by working with precious metals exchanges and major markets around the world. A specific focus of this global engagement is enhancing controls and due diligence for recycled material. The second priority is creating real demand for responsibly sourced precious metals from

Artisanal and Small-Scale Miners. Sourcing gold responsibly from high-risk and conflict-affected regions should be something that adds to a company’s reputation. The cost of due diligence in these challenging environments, unfortunately, is often too high to sustain. The real cost, however, is borne by the 40.5 million people around the world who depend on Artisanal and Small-Scale Mining for their livelihood. If we are going to create demand for responsibly sourced material from high-risk and conflict-affected areas, we need to educate consumers on the right questions to ask to make a positive difference in the lives of these vulnerable people. And we need stakeholder support to communicate what responsible buying looks like and to celebrate companies that do the right thing.

Today, more and more downstream companies outside of the precious metals industry are relying on LBMA’s Responsible Sourcing Programme. They find it a credible and efficient way to demonstrate they are meeting legal requirements and customer expectations around the world. The challenge for all of us is finding ways to work collectively and strategically to meet the growing demands of customers around the world.

In 2019, we launched Version 8 of the Responsible Gold Guidance. As Paul mentions, this was a major strategic expansion to include Environmental, Social and Governance (ESG) issues. This was only the beginning, as over the next year, we will be focusing on how we can work with mining companies to define high, credible standards for ESG.

Beyond ESG, 2019 saw the first round of Responsible Silver Audit Reports. As expected, some companies had a steeper learning curve than others, in particular, those refiners that do not also refine gold. But the overwhelming majority of refiners embraced this work as an important part of being an internationally accredited refiner. And for those that are already undergoing the process for gold and already have the systems in place, it was more a matter of there now being recognition for their systems. Creating more demand for Responsible Silver is harder due to media attention on gold, but it is part of our strategic plan.