World Gold Council Conflict-Free Gold Standard Presented by Terry Heymann | 1 October LBMA Conference, Rome
World Gold Council Conflict-Free Gold Standard
Presented by Terry Heymann | 1 October
LBMA Conference, Rome
Contents
2
1. Introducing the World Gold Council
2. The Conflict-Free Gold Standard
World Gold Council | October 2013
Stimulating and sustaining demand for gold
3
• The global authority on gold and
the first source of informed
opinion
• Develop insights into future role
of gold across the multiple
sources of gold demand
• Collaborate with partners,
intervene to deliver solutions and
create new markets, which
increase and sustain the demand
for gold
World Gold Council | October 2013
4
World Gold Council Members
ASSOCIATES: China National Gold Corp., Franco-Nevada Corp., Hutti Gold Mines Co., Mitsubishi Materials Corp. and Royal Gold Inc.
World Gold Council | October 2013
The Conflict-Free Gold Standard
5 World Gold Council | October 2013
What is the Conflict-Free Gold Standard?
• A common approach by which gold producers can assess and provide
assurance that their gold has been extracted in a manner that does not
cause, support or benefit unlawful armed conflict or contribute to
serious human rights abuses or breaches of international humanitarian
law
Why have we developed it?
• An industry-led approach to address concerns that link gold mining to
the financing of armed conflict
• Designed to “operationalise” the OECD Guidance for Responsible
Supply Chain of Minerals from Conflict-Affected and High-Risk Areas
• Intended to promote responsible mining and encourage investment in
conflict-affected areas when it is appropriately undertaken
• Endorsed by LBMA and aligns with their Responsible Gold Guidance
6
The Conflict-Free Gold Standard
World Gold Council | October 2013
How the Standard has been developed?
• Under the mandate of the Board of the World Gold Council and
overseen by the Responsible Gold Steering Committee
• Extensive consultation process, including two draft Standards
• Two pilot case-studies in Mexico and Ghana
• Designed to be both pragmatic and credible
Anticipated timeline
• October 2012: Final Standard published
• 2013: First year of implementation
• Early 2014: First public disclosure re: conformance, with external
assurance
• The World Gold Council is not acting as a certifying body
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The Conflict-Free Gold Standard
World Gold Council | October 2013
Consultation & Engagement for the CFGS (selection)
8 World Gold Council | October 2013
• World Gold Council member companies and other entities who apply
the Standard will be expected to report publicly on their conformance or
otherwise with the Standard
• This “Conflict-Free Gold Report” should be publicly disclosed in
company reports and/or on the company website and should be
externally assured. This should be done at least annually and will cover
activities over a 12 month period
• Two Guidance Documents are available to support implementation and
assurance:
• Guidance for Implementing Companies
• Guidance for Assurance Providers
• The Standard and Guidance documents include approaches to
addressing deviations from conformance
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Conformance and Public Disclosure
World Gold Council | October 2013
Conflict-Free Gold Standard: Structure
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• For non-conflict affected regions, parts A, D and E remain relevant
• Companies required publicly to disclose conformance with the Standard
(e.g. in annual report, sustainability report)
• Independent, third party assurance of this disclosure
• Based on established benchmarks (e.g. OECD Guidance, UN Guiding
Principles on Business and Human Rights, Voluntary Principles on
Security and Human Rights, EITI)
5 stage assessment
Part A
Conflict
Assessment
Part B
Company
Assessment
(conflict-areas only)
Part C
Commodity
Assessment
(conflict-areas only)
Part D
Externally-
Sourced Gold
Assessment
Part E
Statement of
Conformance
documentation
Part A – Conflict Assessment
11 World Gold Council | October 2013
• Companies need to carry out due diligence about operating environment
but should not have primary responsibility for defining conflict-affected
locations
-Primary reference point is the Conflict Barometer produced by the
Heidelberg Institute for International Conflict Research
• Companies must conform with international sanctions
• Not intended to exclude output from conflict-affected areas; but to ensure
it is not funding armed groups
5 stage assessment
Part A
Conflict
Assessment
Part B
Company
Assessment
(conflict-areas only)
Part C
Commodity
Assessment
(conflict-areas only)
Part D
Externally-
Sourced Gold
Assessment
Part E
Statement of
Conformance
documentation
Part B – Company Assessment
12 World Gold Council | October 2013
• Intended to ensure strength of company management systems
-Commitment to human rights
-Corporate activities (e.g. disclosure of human rights record)
-Security arrangements (e.g. risk assessments; control of private and
public security)
-Transparency of payments and benefits in kind (to governments and
other entities)
-Community engagement; whistle-blowing and grievance mechanisms
5 stage assessment
Part A
Conflict
Assessment
Part B
Company
Assessment
(conflict-areas only)
Part C
Commodity
Assessment
(conflict-areas only)
Part D
Externally-
Sourced Gold
Assessment
Part E
Statement of
Conformance
documentation
Part C – Commodity Assessment
13 World Gold Council | October 2013
• Intended to assess the risk that gold may fund conflict and associated
human rights abuses
-Tracking of gold-bearing material to avoid ‘leakage’ of material
-Treatment of low concentrations of gold-bearing materials
-Segregation of non-conformant materials
-Transport arrangements
• Standard’s scope ceases when custody of gold transfers to refiner
5 stage assessment
Part A
Conflict
Assessment
Part B
Company
Assessment
(conflict-areas only)
Part C
Commodity
Assessment
(conflict-areas only)
Part D
Externally-
Sourced Gold
Assessment
Part E
Statement of
Conformance
documentation
Part D – Externally-Sourced Gold
14 World Gold Council | October 2013
• Intended to ensure that any gold ‘bought-in’ is produced responsibly
• Sets out OECD-aligned risk-based due diligence requirements
5 stage assessment
Part A
Conflict
Assessment
Part B
Company
Assessment
(conflict-areas only)
Part C
Commodity
Assessment
(conflict-areas only)
Part D
Externally-
Sourced Gold
Assessment
Part E
Statement of
Conformance
documentation
Part E – Statement of Conformance documentation
15 World Gold Council | October 2013
• Companies must provide a Statement of Conformance for gold leaving
their mine-site
• Useful to aid refiners’ due-diligence processes (e.g. for London Bullion
Market Association Responsible Gold Guidance or EICC-GESI Conflict-
Free Smelter Programme)
5 stage assessment
Part A
Conflict
Assessment
Part B
Company
Assessment (conflict-areas only)
Part C
Commodity
Assessment
(conflict-areas only)
Part D
Externally-
Sourced Gold
Assessment
Part E
Statement of
Conformance
documentation
Conclusions
16 World Gold Council | October 2013
Why is the Conflict-Free Gold Standard important?
• Action to eradicate the misuse of gold to fund conflict
• Protects the reputation of gold
• Designed to support responsible production and avoid stigmatising
countries and, thereby, increasing instability and poverty
• Underlines gold’s role as a source of social and economic development
• Developed through an intensive consultation process
• Public disclosure and external assurance
• Credible and pragmatic
• First industry-led standard that seeks to define ‘responsible conduct’ in
conflict-affected areas
Thank you
To view a copy of the Conflict-Free Gold Standard and see views from a
range of stakeholders, please visit:
http://www.gold.org/conflict-free
http://www.gold.org/video/play/gold_standard_film/
World Gold Council
10 Old Bailey, London EC4M 7NG
T +44 20 7826 4700
F +44 20 7826 4799
www.gold.org