Dubai: A new global initiative has been launched to ensure each gram of gold that turns up at a jewellery shop - or used for any other purpose - is properly sourced. And verified as being so.
To do this, the campaign starts from the very source – the gold mines. Under the “Responsible Gold Mining Principles”, mining companies will need to get themselves independently certified that they are going about their business in the most ethically and socially responsible manner acceptable. These companies have three years to go through the processes and win their certification.
According to a senior official at UK headquartered World Gold Council, the move addresses the need for the gold industry to conform with “ESG” (Environmental, Social, Governance) standards. It is based on these that global funds more often than not decide where to park their funds. (The oil and gas industry is another to have come under greater scrutiny from the ESG movement.)
But these issues could matter even to a shopper who turns up at a jewellery store in Dubai or anywhere else. “This is the first global approach to set up a responsible gold mining code,” said Terry Heymann, CFO at WGC. “Questions continue to be asked about whether mining companies can operate responsibly.
“The Principles represent a chance for the gold mining industry to show that it cares deeply about operating responsibly and about the social impact.”
Dubai, as a centre of the global bullion trade and a city where fine jewellery never goes out of style, already has in place tough requirements to ensure that gold passing through local refiners and those being sold in the market can account for their origins. Licenses are issued to refiners only after they conform to such requirements.
Even wholesale gold traders and retailers have to ensure they do all their sourcing in a most transparent manner. Much of the sourcing these days is done through international bullion banks.
In particular, the global gold trade does not want to see the yellow metal being brought in from conflict-inflicted countries or where the miners tend to use child labour or pay their workers less than sustenance wages. (The diamond industry already has these covered through the “Kimberley Process”, which highlighted the need to root out the presence of stones brought in from war-torn areas, or more popularly known as “blood diamonds”.)
It is now the turn of the gold industry to raise the ante on such practices. And then expand the scope even further.
“This is a broader initiative across the industry - from the mine site to the end consumer,” said Heymann.
Supply chain controls
But isn’t this particular move more or less confined to ensuring mining companies get it right? What of the rest of the supply chain?
“Sure, challenges could rise elsewhere; WGC works closely with LBMA (London Bullion Market Association) who oversees refiner accreditations,” Heymann added. “There are strict controls on the gold they are sourcing… though there have been instances when the controls have been not as robust as we believe they should be.”
So, the new Responsible Gold Mining Principles could be one way of tightening the process further, because it is at the mining part of it that scrutiny tended to be light.
“It is a way for mining companies to be held accountable, disclose their performance and give extra assurances, and build even greater confidence and trust in gold,” Heymann said.
* Having controls to combat bribery and corruption in all their forms, conflicts of interest and anti-competitive behaviour by employees, agents, or other company representatives.
* Regularly conduct due diligence to identify human rights, corruption and conflict risks associated with their activities and in the supply chain to prevent adverse impacts. Risk-based due diligence even on those entities to which the mining companies sell products.
* They will also be publishing a “Supply Chain Policy” to get contractors and suppliers to operate responsibly and to have standards of ethics, safety, health, human rights and social and environmental performance comparable with theirs.
* Ensure that they do not cause, or are complicit in, human rights abuses, either directly or through business relationships.