Investors 'cannot have confidence' LBMA gold is 'free of human rights abuses'

Responsible Gold Guidance 'should not be recognised'

James Baxter-Derrington
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Recent changes signals to refiners "rules can be bent"
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Recent changes signals to refiners "rules can be bent"

London Bullion Market Association's (LBMA) Responsible Sourcing Programme fails to prevent human rights abuses and illicit gold in its supply chain, according to an open letter signed by five civil society organisations (CSO).

Global Witness, Rights and Accountability in Development (RAID), SwissAid, Fastenopfer and Society for Threatened Peoples allege there are "serious shortcomings" in LBMA's Responsible Gold Guidance (RGG), which they argue is "not aligned" with the OECD Due Diligence Guidance for Responsible Supply Chains and "falls short of the required standard and should not be recognised".

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Investment funds across the active and passive spectrum, along with consumer facing companies such as Apple, Tesla and Disney, utilise LBMA Good Delivery bars to provide the gold for investors, relying on the organisation to ensure the metals are compliant with best practice. The letter argues that due to "serious weaknesses in the programme", investors "cannot have confidence that LBMA's Good Deliver gold is free of human rights abuses and not linked to conflict and illicit trade".

A key concern raised in the letter is the updated position of LBMA that refiners should suspend trade only as a "last resort", as opposed to its previous standard that trade should be suspended if there is "a possibility the gold sourced is illicit", which the CSOs argue "dramatically lowers the bar" and signals to refiners that "rules can be bent".

In recent months, three CSOs have independently raised specific cases detailing allegations that LBMA-approved refiners were involved with conflict gold or gold originating from a mine with a "troubled human rights record".

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The letter identified 11 key issues which it urges LBMA to address and offers recommendations for how to do so:

• Lack of transparency in annual reporting

• Origin of refined gold is not correctly reported

• Weak guidance on suspending trade with problematic suppliers

• Low quality of audits

• Lack of disclosure of audit findings

• LBMA lacks access to crucial information

• Questionable independence of auditors

• Opaque review processes

• Findings are withheld when incidents are investigated

• Lack of sanctions

• Lack of independence

LBMA declined to make any immediate comment.

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