INTERVIEW: Gold industry needs to define ESG requirements via collaboration: LBMA

The gold industry needs to collaborate, from mining to refining, and devise a set of environmental, social and governance standards that work for the success of all, not just a few, was the view of London Bullion Market Association CEO Ruth Crowell in conversation with S&P Global Platts on Sept. 22.

The industry group published its first annual Responsible Sourcing Report Sept. 22, which aims to shine a light on the traceability of gold from mine to refinery.

"The aim of this annual report is to increase the transparency of the LBMA Responsible Sourcing program. It reviews the refiners' and auditors' performance during the previous 12 months and provides detail on the country of origin of where Good Delivery refiners mine and refine gold around the world," the LBMA said in a statement.

To delivery gold into LBMA accredited vaults, refiners need to make the grade across a variety of metrics and secure a place on the Good Delivery List.

The new metrics are another caveat on the list, in an era of increased ESG interest not only from investors, but the wider population.

Crowell was quick to point out that the standards are a work in progress and a "big piece of the puzzle" but for true success the CEO wants to define the methodology around market requirements.

"I just want people to call me and tell me what they want," she said.

For LBMA members the new rules are "enforceable" with failure leading to potentially being ejected from the GDL.

"Our system is unique in the fact that it's enforceable, other industry standards are optional," Crowell said. She noted that ESG is a hot topic across the value chain "demand for it [ESG] is there unlike it was only a few years ago."

For real success the CEO said she would like to get more input from the mining industry and have them help shape any standards. "There's a lot of debate around what ESG standards mean to any given individual."

In its initial report the LBMA set out the scope of the program, including the responsibilities of LBMA accredited refiners and the steps LBMA takes to ensure their compliance with its program.

"The continuing aim, however, is to provide information on the preceding 12 months, and on how the refiners performed under the program. Every year, the report, will feature case studies to illustrate the key points and remedial action that LBMA has taken to deal with issues of non-conformance. In addition, auditors' performance will also be reviewed, and more information provided on how LBMA has further strengthened auditor training," the LBMA statement said.

Pandemic highlights need to collaborate

Crowell said that the recent pandemic had highlighted the need for increased collaboration around sustainability issues.

Also Sept. 22 gold mining lobby group The World Gold Council published a report entitled Gold Mining's Contribution to the UN Sustainable Development Goals.

"Responsible gold mining can lead to sustained social and economic development. This report provides a clear demonstration of the positive role that responsible gold mining operations can bring to their local communities and support delivery of the UN's Sustainable Development Goals," WGC CFO Terry Heymann said.

Crowell told Platts that the WGC and the LBMA had been making great strides in collaborating on ESG-related matters.

"I am looking for a holistic approach, that creates responsible demand [for gold]. It's a business positive to do the right thing. To access the professional [investment] market you have to be doing the right thing, that means something to investors that care," Crowell said.

More and more fund managers are looking for ethical and sustainable investment products, all related to growing ESG demands.

"The LBMA wants to set and enforce standards, find the right balance and help the market get there," she added.