by Sakhila Mirza, Executive Board Director and General Counsel

Sakhila Mirza, Executive Board Director and General Counsel

Two years ago, we announced our three-year Responsible Sourcing strategy at the LBMA 2019 conference in Shenzhen. We set out our five strategic objectives and confirmed our commitment to Responsible Sourcing. A lot has been delivered against the strategy, but more still must be done, especially as we start thinking about the next three-year strategic plan. There is no escaping the growing focus on Environmental Social and Governance (ESG) risks, and the need for sustainable supply chains.

Whilst Responsible Sourcing remains the front and centre focus for all our Good Delivery List (GDL) refiners, as well as the wider global precious metals market, the sustainability agenda is much broader. It is therefore important that as we look ahead into 2022, we work together to help define sustainability for the global precious metals market and identify the supporting priorities, in line with the UN Sustainable Development Goals. Our ultimate objective will be to ensure Responsible and Sustainable supply chains for the global precious metals, and to achieve this, we must work with the various actors along the entire value chain.

There is no escaping the growing focus on Environmental, Social and Governance (ESG) risks, and the need for sustainable supply chains.

Refiners’ Audit Programme

Integral to our commitment to continuous improvements, is our Responsible Sourcing Audit programme. The latest Responsible Gold Guidance (RGG) version 9, due to be published later this year, is another step in the right direction of raising the bar and improving standards, especially given the focus on ESG requirements and recycled gold. There has been a strong shift in demand for more recycled gold, as evidenced by our country-of-origin data. The main challenge with recycled gold is understanding its true origin, and we therefore need to make sure the right systems and controls are in place to effectively identify recycled gold and to mitigate the risks associated with it. The progress, however, doesn’t stop there, and even before version 9 has been officially launched, we have already started the planning for version 10.

We understand that to bring about effective change, the development of the programme must be a phased approach, and refiners need the time to effectively implement the changes. In 2023, we will be able to meaningfully review the effectiveness of the new version and then consider how we can further improve the audit programme.

The main challenge with recycled gold is understanding its true origin, and we therefore need to make sure the right systems and controls are in place to effectively identify recycled gold.

Whilst audit programmes are a valuable tool to help identify and address supply chain risks, support is needed from the wider responsible sourcing ecosystem. Industry audit programmes are not enough, but if combined with the efforts of national authorities and key upstream and downstream actors, the entire eco-system can effectively ensure the legitimacy of the gold and silver entering global supply chains.

International Bullion Centres (IBCs)

One of the key developments over the last 12 months, has been our work on the IBC Recommendations.

Our IBC Recommendations were the first step to help with the consistent implementation of OECD standards across all the major gold trading centres. We recognised that not all major IBCs operate to the same standards. They all have a strong interest in understanding the risks but are perhaps less clear on how these risks should be addressed and what is required.

LBMA therefore identified three main priorities as part of the IBC Recommendations: addressing the risks that arise in relation to sourcing of recycled gold; eliminating cash transactions; and supporting responsible Artisanal Small-Scale Mining (ASM):

  • Whilst LBMA is committed to raising the standards on the sourcing of recycled gold through RGG version 9, support is still required from the IBCs to help with the implementation of the OECD guidance within their markets.
  • In relation to ASM, we need to provide a safe platform for our GDL refiners to be able to meaningfully source responsible ASM. However, support from national authorities is also needed to help GDL refiners access responsibly mined ASM, particularly in their assessment of ASM sites and the provision of credible ASM data.
  • Finally, LBMA is very focused on eliminating cash transactions, subject to very limited exceptions (as explained in Section 2 of this report)

Going into 2022, we are developing a methodology to review each IBC's development and implementation of the OECD guidance. Our analysis will aim to assess the promotion and implementation of responsible and transparent sourcing practices. This will help us to have a better-informed conversation with each IBC, and how we can work together to address any gaps.

Upstream and Downstream Engagement

Both the Upstream and Downstream have important roles to play within the Responsible Sourcing Ecosystem. There is a lot of development in relation to individual corporates committing to the UN Guiding Principles on Business and Human Rights. However, what does this mean in practice, and how can the gold industry benefit from this commitment?

We have strengthened our engagement with upstream actors. For example, over the years we have been part of the consultation for the development and implementation of the World Gold Council’s Responsible Mining Guiding Principles. There are lessons learnt and shared, so that both the miners and refiners can better understand expectations and the pressure points. Our GDL refiners have welcomed the ongoing development of standards in the upstream, but also recognise we can further collaborate with them on supporting responsible ASM.

LBMA is committed to increasing direct sourcing of ASM-produced gold

Further work needs to be done with the downstream, who arguably have a lot of leverage. In the coming year, we will be working on the roadmap for engagement with the downstream actors and how they can use their leverage to support the responsible supply chains, especially in relation to ASM. There are many on-the-ground initiatives that are employing controlled measures to support ASM communities and some downstream actors, have committed their support. However, more is needed, because the status quo is to avoid ASM material, rather than find solutions to the many obstacles and risks associated with the sector. LBMA is committed to increasing direct sourcing of ASM-produced gold and plans to work with refiners and other key stakeholders to explore new approaches and mechanisms to support this initiative.


Finally, LBMA strengthened its team with the recruitment of Alan Martin as Head of our Responsible Sourcing Programme (Programme). Prior to joining LBMA in December 2020, Alan spent over a decade carrying out investigative research into the intersection between natural resources, human rights and illicit financial flows. As the former Director of Research at the Canadian organisation IMPACT and member of the RJC’s Standards Committee from 2014-2017, he has an intimate understanding of the challenges and vulnerabilities to responsible sourcing across the value chain—from artisanal mining, trading and refining hubs to jewellery manufacturing centres. We look forward to him sharing his expertise and knowledge as we undertake our next strategic review and build our Programme.

Shared Responsibility

To conclude, and to emphasise, ownership of responsible supply chains is shared across the entire value chain. It’s the role of LBMA to take the lead on establishing, and improving standards, but LBMA can’t do this alone. Collaboration and engagement is absolutely essential to help ensure supply chain integrity and we welcome your support.