Responsible Sourcing Report 2021
Section 6: Future Development of the Programme
Stakeholder Engagement
One challenge of Responsible Sourcing is that the status quo is never an option. The ethical landscape is continually shifting and requires industry actors – including LBMA – to be nimble and responsive when new issues surface.
Our Responsible Sourcing Strategy reaffirms LBMA’s commitment to the implementation of the OECD Due Diligence Guidance and positions us as a leader for the continuous improvement of standards that ensure a sustainable precious metals market.
With the current three-year Strategy coming to a close in 2022, we anticipate a year of reflection and discussion as we define the priorities that will shape our future direction. Without prejudicing the outcome of those consultations, we expect that any new priority areas will build on and support existing programmatic efforts.
Likewise, 2021 marks the implementation of Responsible Gold Guidance (RGG) Version 9, but it also represents the start of a fresh round of thinking about what could be further improved and refined in Version 10.
One element that transcends both future iterations of the RGG and our strategic planning is transparency. RGG Version 9 represents a step forward in terms of the disclosure of high-risk suppliers. While commercial sensitivities will be respected, LBMA remains committed to working with refiners to be as publicly transparent as possible about their supply chains and sourcing practices.
Our work with International Bullion Centres (IBCs) will continue and constitutes a key plank of our external engagement and efforts to harmonise Responsible Sourcing standards and practices.
LBMA is fortunate to maintain positive working relationships with partners across government, industry and civil society. We look forward to hearing suggestions and recommendations that can help shape the development of the next three-year plan and support the broader integrity of the Programme.
It is imperative that stakeholders engage with LBMA, and we welcome your help with the development of the Programme. To find out more, please get in touch with Alan Martin, Head of Responsible Sourcing, at: affairs@lbma.org.uk.
Supporting Artisanal and Small-Scale Mining (ASM)
One puzzle we will be giving more thought to is how GDL refiners can increase the amount of gold they source directly from ASM suppliers.
Despite comprising 16% of globally mined material, artisanally mined gold currently accounts for less than 1% of the throughput of GDL refiners, and has dropped 16% from 2019. LBMA recognises that ASM gold’s proximity to money-laundering, conflict, financial and other residual risks makes it unattractive to LBMA refiners. However, we also understand the critical role it plays in many underdeveloped economies, providing livelihoods to millions. The lack of direct sourcing by GDL refiners exacerbates the stigma associated with the sector, driving it underground or to secondary markets with less strenuous sourcing practices.
Our commitment to the sector takes several forms, including linking refiners with NGOs working to improve mining and sourcing practices in ASM communities; however, over the longer term, LBMA is considering a range of options to remove the key barriers that hinder direct sourcing of ASM material by GDL refiners.
Going forward, LBMA will convene the key actors in the supply chain as part of a feasibility study to consider and test various approaches that can offer greater sourcing assurances and traceability to GDL refiners. We will also consider ways to repurpose LBMA’s ASM Working Group to include actors involved at critical steps in the value chain, providing a constructive forum for discussion and co-operation. This work is expected to begin in early 2022.
The development of a three-year Responsible Sourcing Strategy gives us the perfect opportunity to take a step back and look holistically at our Programme and how we could better meet the needs of our stakeholders including our membership, refiners, investors, civil society, governments and, of course, the OECD.
Ruth Crowell, Chief Executive, LBMA