Home » Gold Industry Embraces Transparency with New Supply Chain Initiative

Gold Industry Embraces Transparency with New Supply Chain Initiative

WGC Members Commit to Ethical Sourcing and Transparency

by Adenike Adeodun

In a pivotal article, Terry Heymann, CFO of the World Gold Council (WGC), articulates a compelling argument for the pivotal role of disclosing mining partners’ information in fortifying a trusted ecosystem within the gold industry. This move is seen as a strategic step towards mitigating the entry of malign entities into the formal gold market. In September 2023, WGC members, who encapsulate a significant portion of the global large-scale gold mining industry, pledged to augment transparency across the gold supply chain. This pledge encompasses two principal commitments: the annual publication of their refining partners’ names and locations, and the integration into the Gold Bar Integrity (GBI) platform, where they will confidentially share “core data” regarding the gold produced for their refining associates.

Six months after these commitments, it’s timely to evaluate their implications and the envisioned trajectory towards a more transparent and credible gold value chain. The push for transparency is not isolated to the gold industry but is a burgeoning trend across various sectors advocating for heightened openness about supply chain configurations. However, it’s especially crucial in the gold sector due to the industry’s susceptibility to exploitation by nefarious actors. This necessity prompted the Organisation for Economic Cooperation and Development (OECD) to establish guidelines over a decade ago for responsible gold sourcing, particularly from conflict-affected and high-risk areas. The OECD insists on ethical sourcing practices rather than imposing an embargo on gold from these regions.

Responsible mining and sourcing practices extend beyond mere due diligence. They encompass a wide range of social and environmental considerations, such as labor rights, community impact, and environmental stewardship. This broad perspective is crucial for businesses aiming to operate responsibly, aligning with laws, treating partners fairly, and contributing to the socio-economic well-being of local communities and nations.

The introduction of the Responsible Gold Mining Principles in September 2019 was a significant step towards setting clear expectations for a responsible gold mining company. However, a gap remained in demonstrating collective responsibility along the supply chain. This gap is now being addressed through WGC members’ commitments to not only operate ethically but to also collaborate with other responsible entities, thereby strengthening the gold supply chain’s integrity.

The emphasis on supply chain due diligence is increasingly becoming a focal point for regulators as well, with initiatives like the European Union Corporate Sustainability Due Diligence Directive pushing companies to scrutinize their supply chain partners more closely. The WGC members’ commitments represent a robust declaration to cultivate a more secure supply chain, exclusively partnering with responsible businesses. Disclosing refining partners’ details will allow investors and consumers to better understand with whom WGC members are choosing to collaborate, thereby promoting a trusted ecosystem that gradually makes it challenging for disreputable actors to penetrate the formal gold market.

The initiative to input core data into the GBI platform further enhances the gold supply chain’s credibility. Over time, as more participants contribute data to the GBI platform, it becomes plausible that each gold bar could be accompanied by a “digital twin,” showcasing responsible sourcing and ownership. This development not only bolsters confidence in responsible gold purchasing but also lays the groundwork for digital gold products, marking an exciting frontier of growth and innovation for the WGC.

In essence, the gold industry is evolving from a focus on individual company responsibility to a comprehensive supply chain responsibility. While this shift will require time to fully embed and manifest, the WGC members’ commitment to transparency is sculpting a new landscape for the gold sector, positioning responsibly traded gold as a paradigm of ethical business practices. This evolution ensures gold’s status as a trusted asset class for future generations, illustrating a significant stride towards operational integrity and sustainability within the global gold market.


Source: Mining Weekly

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