Responsible Sourcing Report 2021
Section 13: The Responsible Sourcing Ecosystem
Although LBMA administers the Good Delivery system, ultimately, the responsibility to ensure gold/silver is ethically sourced is shared across the entire industry and with the authorities in the relevant jurisdictions. This means that LBMA’s Responsible Sourcing Programme (Programme) is part of a wider ecosystem that has four key components.
Industry due diligence programmes seek to raise standards throughout the supply chain, whether at the mining, refining or retailing level. Their administrators, including LBMA, can enforce those standards should non-conformances be identified. The commercial and reputational power of the Programme helps to ensure their development and influence. Any Good Delivery List (GDL) refiner that loses its accreditation by LBMA cannot sell its gold into major international markets, including Loco London, the largest financial market in the world for precious metals.
Industry programmes have limitations, however, in terms of their legal authority, scope, applicability and supporting resources for enforcement. Hence, additional components are key to the functioning of the wider ecosystem. National authorities, downstream representation and stakeholder engagement are important for ensuring coverage in parts of the supply chain that industry programmes simply cannot reach.
National authorities, through regulatory change and law enforcement, provide the ultimate sanctions across the supply chain. Industry programmes can complement and expand these regulations by defining industry best practice and enforcing requirements globally by reaching refiners and supply chain actors outside of the reach of authorities’ jurisdictions. LBMA collaborates with willing authorities to implement important recommendations in international bullion to help raise global standards.
Downstream actors, including banks, electronics and jewellery companies, continue to collaborate with their suppliers to ensure that material is sourced and processed responsibly from beginning to end. Some can exercise significant influence and work with their supply chains to bring about change.
Other stakeholders are key to providing support and feedback to all parties in the industry. By identifying and escalating unique issues through investigative research, important support and feedback are gained by all parties in the supply chain.
Each of these four components of the ecosystem has its expertise and its limitations
Collaboration, intelligence-sharing and consultation are important to ensure the highest standards of due diligence for Good Delivery List refiners and for the wider precious metals industry.