The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas provides detailed recommendations to help companies respect human rights and avoid contributing to conflict through their mineral purchasing decisions and practices. The Due Diligence Guidance is for use by any company potentially sourcing minerals or metals from conflict-affected and high-risk areas.
It is one of the only international frameworks available to help companies meet their due diligence reporting requirements.This presentation gives an overview on the OECD Due Diligence Guidance and industry programmes in the gold mining sector.
It is the first sectoral guidance that draws on the OECD Guidelines for Multinational Enterprises in practice.
Find out more at http://mneguidelines.oecd.org/mining.htm
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Introduction to the OECD Due Diligence Guidance for responsible mineral supply chains
1. The OECD Due Diligence Guidance
for Responsible Supply Chains and
Programme Initiatives (DDG 101)
Shivani Kannabhiran
Policy Analyst
OECD Investment Division
2. Why get involved in responsible
mineral sourcing?
Ethical responsibility
Avoid risk of UN sanctions if sourcing from the DRC
or neighbouring countries
Legal requirement if operating in DRC, Rwanda and
Burundi
Supply chain security – avoid unnecessary
disruptions in tantalum supply
Avoid reputational damage for your company and
the tantalum industry
EU and US market access – meet customer demands!
Gain more information on your supply chain for
better commercial decision-making
3. Conflict financing
Non-state armed groups
or public security forces,
associated with serious
abuses:
– Illegally control mine
sites, transportation routes,
or dealers in minerals
– Illegally “tax” or extort
money or minerals from
artisanal miners, mineral
traders and exporters
– Illegally “tax” or extort
money or minerals at mine
sites, transportation routes,
or points where minerals
are traded
CASE STUDY: Gold from the
Democratic Republic of the Congo
• Alluvial, artisanal gold & informally,
illegally mined
• Estimated conflict area annual output:
~20-30 tonnes
• Market value: $840m~$ 1.26 bn
Source: WGC & UN GoE DRC (2012)
4. Demand for responsibly produced
minerals
Political Consumer Legal
• G8 (2007, 2008,
2009, 2011, 2013)
• UN Security
Council Resolutions
on DRC (2009,
2010) and Ivory
Coast (2013)
• ICGLR Heads of
States endorsement
(2010)
• OECD Council
Recommendation
• Consumer
campaigns in US
and Europe
• From brand-
name users via
industry groups
(EICC, GeSI)
• Section 1502 of
US Dodd-Frank
Act – conflict
minerals reporting
• Draft EU
legislation on
responsible
mineral supply
chains
• Legal requirement
in DRC, Rwanda
and Burundi
5. Conflict Minerals Regulation
► July 2010 – Section 1502 of the
US Dodd-Frank Act:
Specific reporting requirements for
public companies using 3Ts and gold
DRC and adjoining countries focus
(reasonable country of origin inquiry)
If from “DRC countries”, companies
need an audited “Conflict Minerals”
report
► August 2012 – Final US SEC rules
recommend companies use the
OECD Due Diligence Guidance
► Early – June 2014 – Deadline for
first filings for applicable
companies5
Section 1502 of the U.S. Dodd-Frank Act
Under Dodd-Frank, audited
“Conflict Minerals” report
should include:
Country of mineral origin
Due diligence procedures
Smelters of minerals
Mine of origin (to greatest
possible specificity)
Description of products not
“DRC Conflict-Free”
6. Conflict-Free Minerals Regulation
► March 2013 – European Commission
announces intention to develop a
comprehensive initiative on
responsible supply chains of minerals
from conflict-affected and high-risk
areas
► May 2013 – EU holds public
consultation at the OECD
► March 2014 – Draft EU initiative
and legislation released:
Voluntary certification scheme for importers
of 3T and gold into EU common market
Based on OECD Due Diligence Guidance
Accompanying measures include public
procurement benefits, SME financing for
due diligence, funds for OECD
implementation)
EU initiative on responsible mineral supply chains
7. OECD Due Diligence Guidance for
Responsible Mineral Supply Chains
Objective:
To provide practical guidance for
companies to ensure they do not contribute to
conflict or abuses of human rights through
their mineral and metal procurement practices
Method:
5-step risk-based due diligence process
Scope:
Applies to all companies throughout the entire supply chain that
produce or source minerals from any conflict-affected or high-risk
area –global, applicable to other minerals
8. Key features of the OECD Due
Diligence Guidance
• One set of expectations
A common framework for due diligence
expectations throughout the entire mineral
supply chain from mines until end users
• Progressive approach
The promotion of constructive
engagement with suppliers in order to
gradually affect changes in their sourcing
practices without embargoes!
• Different treatment
Depending on mineral (e.g. Supplements on Gold, and
3Ts) and location of company in the supply chain (e.g.
upstream and downstream companies), resulting in
complementary due diligence processes
9. Supplement on Gold
Applies to all companies in the supply chain
Mining
companies,
ASM
Local gold
traders &
exporters
Refiners Bullion Banks
Jewellers,
manufacturers
Upstream
Companies
Downstream
companies
RecyclersRefiners are the “choke point”
in the supply chain!
10. Structure of the OECD Due Diligence
Guidance
• 5-step risk-based framework for all minerals from conflict-
affected and high-risk areas (Annex I)
• A model supply chain policy (Annex II):
– NO! Sourcing from parties linked to serious abuses
– NO! Direct or indirect support to non-state armed groups
– MITIGATE! Direct or indirect support to public or private security forces
– MITIGATE! Bribery in the supply chain, fraud or misrepresentation of chain
of custody or traceability information
– MITIGATE! Money-laundering through the mineral supply chain
– MITIGATE! Non-payment by suppliers of taxes, fees and royalties related to
mineral extraction, transport and export, or non-disclosure of payments by
suppliers in accordance with EITI
• Principles for Risk Mitigation (Annex III)
• Supplements on Tin, Tantalum and Tungsten (2011) and Gold
(2012), including special Appendix on artisanal and small-scale
mining for gold
11. Five Step Risk-Based Due Diligence
Step 1
• Establish strong company management systems
Step 2
• Identify and assess risks in the supply chain
Step 3
• Design and implement a strategy to respond to identified
risks
Step 4
• Support independent third-party audit of the refiner’s due
diligence
Step 5
• Report annually on supply chain due diligence
12. Adopt a company policy on 3TG from
conflict-affected and high-risk areas,
consistent with the model policy in the
Guidance (Annex II)
Structure internal management to
support due diligence, e.g. resources, build
capacity
Strengthen engagement with suppliers,
communicate expectations
Collect and maintain transaction
information and documentation with
unique internal reference numbers for all
inputs and outputs
Request suppliers to provide names of
smelters and refiners of all 3TG
products by direct sourcing, marks
imprinted on gold, or from supplier
documentation
Pass on smelter or refiner
information to customers
Step 1: Establish strong company
management systems
Transaction information for
Gold:
a) Information regarding the form, type
and physical description of gold and
gold-bearing materials, e.g. gold ore,
gold concentrate, gold doré, alluvial
gold, recyclable gold, gold bullion,
type of jewellery, etc.
b) Information provided by the supplier
regarding the weight and assay of
gold and gold-bearing materials of
input, and determinations of the
weight and assay of gold inputs and
outputs.
c) Supplier details, including “know
your counterparty” (“KYC”) due
diligence information
d) Unique reference numbers for each
input and output.
e) Dates of input and output, purchases
and sales.
13. Chain of custody or traceability options
Greater risk of fraud = more monitoring!!
- Chain of custody
documentation
Greater monitoring required!
“Bag and tag” -
traceability
Radio frequency tag
(RFID) traceability
-
UPSTREAM
14. Traceability
TRACEABILITY/CHAIN-OF-CUSTODY INFORMATION
a) the mine of origin, with the greatest possible specificity
b) locations where gold or gold-bearing material is consolidated, blended, crushed, milled, smelted
and refined
c) the method of extraction (artisanal and small-scale or medium and large-scale mining), and dates
of concentrating, smelting and refining
d) the weight and assayed quality characteristics
e) the identity of all suppliers and relevant service providers handling the gold in the upstream
supply chain from the mine of origin until the refiner; the ownership (including beneficial ownership);
the corporate structure including the names of corporate officers and directors; the business,
government, political or military affiliations of those companies and officers within conflict-affected
and high-risk areas
f) all taxes, fees or royalties paid to government related to the extraction, trade, transport and
export of gold
g) all payments or compensation made to government agencies and officials related to the
extraction, trade, transport and export of gold
h) all payments made to public or private security forces or other armed groups at all points in the
supply chain from extraction onwards, unless prohibited under applicable law
i) how gold is transported and processes in place to ensure integrity, with due regard taken of
security concerns
UPSTREAM
15. Identify the smelters and refiners in
your supply chain!
Collect information directly from suppliers
Use risk-based approach to verify supplier
information
Assess whether smelters and refiners
are sourcing
minerals responsibly!
Do smelters and refiners undertake OECD
Due Diligence?
Have the smelters and refiners been
audited
under an industry programme?
Step 2: Identify and assess risk
DOWNSTREAM
Preliminary indicators of
due diligence may include:
A public policy on minerals from
conflict-affected and high-risk
areas, consistent with Annex II of
the Guidance
A public report on refiner‘s due
diligence
Participation in international or
industry collaboration on
responsible sourcing, e.g. OECD
Forum and implementation
programme, industry or other
multi-stakeholder initiatives
16. Verify a sample of
chain of custody
or traceability
information
Increase sample
size if
inconcistencies
found!
Map the
circumstances of
the supply
chain(s), under
way and planned
Step 2: Identify and assess risk
UPSTREAM
Risk Factors for Mined Gold
Use a risk-based approach, with more due diligence for
persons, places and transactions that present higher risk!
Any affiliation of suppliers with military, criminal networks or
non-state armed groups.
Militarisation of mine sites, transportation routes and
points where gold is traded and exported.
Evidence of any serious abuses committed by any party in
mines, transportation routes and points where gold is traded
and/or processed.
Information on any direct or indirect support to non-state
armed groups or public or private security forces through
the extraction, transport, trade, handling or export of gold.
Instances of conflict or tensions in the relationship
between ASM and LSM.
Any instances, reports or suspicions of fraud or
contamination in the supply chain
17. Report findings to designated senior
management
Enhance engagement with suppliers and
the internal systems of transparency,
information collection and control over the gold
supply chain
Devise, adopt and implement a risk
management plan with stakeholders, that
includes:
continuing trade throughout the course of
measurable risk mitigation efforts
temporarily suspending trade while pursuing
ongoing measurable risk mitigation
disengaging with a supplier in cases where
mitigation appears not feasible or unacceptable
Monitor supply chain with support from
stakeholder networks
Step 3: Design and implement a
strategy to respond to identified risks
Risk Mitigation
Focus on building capabilities of
suppliers and smelters to
conduct due diligence, with
clear performance indicators
and concrete and specified
timeframes for improvement
(e.g. 6 months recommended)
Companies should only suspend
or terminate a business
relationship with relevant
suppliers when :
The smelter is not using
reasonable and good faith efforts
to implement the Guidance or
participate in related
programmes
Evidence that the smelters
sources from suppliers that
provides direct or indirect
support to illegal armed groups,
or contribute to “serious abuses”
associated with the extraction
and trade of minerals in
conflict areas
18. The scope of the audit
All activities, processes and systems used by the refiner to
implement supply chain due diligence of gold from conflict-
affected and high-risk areas
Audit criteria
The audit should determine the conformity of the
implementation of refiner’s due diligence practices against an
audit standard that is based on this Guidance
Audit activities
Documentation review
On-site investigations of smelter facilities, a sample of the
suppliers, meeting with smelters on-the-ground risk assessment,
and consultation with other experts
**Can be carried out through industry programmes**
Step 4: Carry out or support independent
third-party audits of refiners’ due diligence
19. Report on management practices (i.e. policy, internal systems
of control)
Report on the company risk assessment and risk management
with due regard taken of business confidentiality and other
competitive and security concerns ( i.e. supplier relationships,
prices, security)
Publish the summary audit reports of refiners with due regard
taken of business confidentiality and other competitive or
security concerns
Step 5: Report annually on supply
chain due diligence
20. Summary on Due Diligence
Step 1
• Establish strong company management systems
Step
2
• Identify and assess risks in the supply chain
Step
3
• Design and implement a strategy to respond to identified risks
Step
4
• Support independent third-party audit of the smelter or
refiner’s due diligence
Step
5
• Report annually on supply chain due diligence
• Risk-based, intensity of due diligence proportional to risk!
• Reasonable and good faith efforts, not 100 % compliance
overnight!
• Government and industry programmes can help accomplish due
diligence tasks!
• Use and build upon existing systems!
21. OECD Gold and 3T Implementation
Programme
Information-sharing and promotion of due diligence
– Tools, workshops, webinars and training seminars
– Outreach and training: Africa’’s Great Lakes region, China, Colombia,
Middle East, Turkey, India
Collaboration and problem-solving
– Consistency, harmonisation and mutual recognition of industry
programmes
– Develop common and coordinated solutions
Peer-learning
– Share tools, best practice, promote discussion
ICGLR-OECD-UN GoE Forum on Responsible Mineral
Supply Chains
– Twice a year in May and November
– 7th Forum this May
22. Governed by the Multi-stakeholder
Steering Group – selection of members
BEDEWA
OGP
24. Introduction
• A number of industry and sector initiatives in the gold sector seek to
operationalize the OECD Due Diligence Guidance for Responsible
Supply Chains of Minerals from Conflict-Affected and High-Risk
Areas
• The booklet/guide provides an overview of these industry and
sector initiatives and how they complement each other
24
26. Sample of global industry initiatives for
3T supply chains
Initiative Organisations
involved
Purpose Participation
type
Independent
audit
required
ICGLR’s Regional
Certification
Mechanism
International
Conference on the
Great Lakes Region
(ICGLR)
Establishes a certification mechanism
for the mining and trading of conflict
minerals from the Great Lakes Region.
Based on OECD standards. Industry
programmes may be used for
traceability/chain of custody.
Mandatory for
member countries
Yes
ITRI Tin Supply Chain
Initiative (iTSCi)
ITRI; Tantalum Niobium
International Study
Center; Pact; Channel
Research
Supports responsible sourcing from
Central Africa through the development
of a physical chain-of-custody system
that tracks and monitors minerals from
mine to smelter and a due diligence
system that includes independent audits
and mine site and transportation route
assessments.
Voluntary Yes
Conflict-Free
Sourcing Initiative
(CFSI) - includes the
Conflict-Free Smelter
(CFS) program
Global e-Sustainability
Initiative (GESI);
Electronic Industry
Citizenship Coalition
(EICC)®
Verifies that the sources of conflict
minerals processed by smelters are
conflict-free. Enables downstream
companies to identify and source from
conflict-free smelters. Operationalizes
OECD Guidance for smelter/refiners.
Voluntary Yes
Solutions for Hope;
Make Africa Work;
Conflict-Free Tin
Initiative
Private companies:
AVX, Kemet, F&X,
Motorola, Intel, Philips,
and many more!
Close pipe initiatives to enable
downstream companies to source
conflict-free 3Ts from the DRC with
positive development impacts
Voluntary Yes, Through
implementing
initiatives (e.g.
iTSCi, CFS)
26
27. 3T Industry Initiatives – complementarities
Great Lakes
region
mining &
export
Smelting
Manufactur-
ing
27
Support & Mutual recognition of initiatives on-going
iTSCi assesses risk and brings
traceability from mine to smelter
Conflict-Free
Smelter
Initiative
CFSI Tools:
e.g. Reporting
Templates
1502 Dodd Frank
issuers - downstream
due diligence and
demand for conflict-free
minerals!!
28. Remember: OECD Due Diligence
Guidance
Step
1
• Establish strong company management systems
Step
2
• Identify and assess risks in the supply chain
Step
3
• Design and implement a strategy to respond to identified
risks
Step
4
• Support independent third-party audit of the smelter or
refiner’s due diligence
Step
5
• Report annually on supply chain due diligence
• The Guidance provides an internationally recognised framework
for companies to responsibly source minerals from conflict-affected and
high-risk areas
• The Guidance enables companies to meet due diligence requirements
(Dodd-Frank Section 1502)
• Risk-based, intensity of due diligence proportional to risk!
• Reasonable and good faith efforts, not 100 % compliance
overnight!
29. Remember: Industry programmes and
the OECD Due Diligence Guidance
• Many industry and sector initiatives have been developed
to help companies operationalise the OECD Guidance
• Work continues to further harmonise industry and company
initiatives to support outreach and implementation and reduce
unnecessary duplication of supply chain audits
• For further information on this project and to keep informed of
latest developments: www.oecd.org/daf/investment/mining
• OECD contact emails:
• Tyler.gillard@oecd.org; shivani.kannabhiran@oecd.org,
hannah.koep-andrieu@oecd.org
29
Notas del editor
Good morning, I’m Shivani Kannabhiran
Policy Analyst with the Organisation for Economic Cooperation and Development, and have been associated with this programme since it was launched in 2011. Today’s presentation is to introduce those of you who are new to the work of the OECD Guidance to the context of our work, the 5 steps of the framework (Guidance), the implementation programme and our key implementation partners. ICGLR and sector initiatives in gold and 3T.
Please help yourself to a copy of the Sector Guide for gold
Ask questions – and welcome to the session
Adopted in 2011 by 43 OECD and non-OECD countries that pledged to ensure that companies operating in or based in their borders use the Due Diligence Guidance
Supported by the UN Security Council
Endorsed by ICGLR in Lusaka Declaration and integrated into ICGLR Certification Mechanism!
Referenced by U.S. SEC in final rules for section 1502
Integrated into, referenced and/or relied on by multiple industry programs (e.g. DMCC, EICC-GeSI CFS Programme, iTSCi, LBMA, RJC, World Gold Council)
Legal requirement to operate in the DRC
Support from EU for future initiative / legislation
Adopted in 2011 by 43 OECD and non-OECD countries that pledged to ensure that companies operating in or based in their borders use the Due Diligence Guidance
Supported by the UN Security Council
Endorsed by ICGLR in Lusaka Declaration and integrated into ICGLR Certification Mechanism!
Referenced by U.S. SEC in final rules for section 1502
Integrated into, referenced and/or relied on by multiple industry programs (e.g. DMCC, EICC-GeSI CFS Programme, iTSCi, LBMA, RJC, World Gold Council)
Legal requirement to operate in the DRC
Support from EU for future initiative / legislation
So, what exactly what do we mean when we talk about due diligence for conflict-free supply chains, and what is the OECD Due Diligence Guidance?
OBJECTIVE OF THE GUIDANCE IS TO PROVIDE CLEAR AND PRACTICAL DIRECTION FOR COMPANY’S TO ENSURE THAT….
THE GUIDANCE USES A 5 STEP RISK-BASED DUE DILIGENCE APPROACH, MANY COMPANIES ARE ALREADY FAMILIAR WITH RISK-BASE DUE DILIGENCE PROCESSES AND THUS CAN INTEGRATE THIS PROCESS INTO THEIR PREEXISTING SYSTEMS AS THEY SEE APPROPRIATE
The Guidance applies to ….
THAT THEREFORE INCLULDES companies which do not know if the gold in their supply chains comes from a conflict area like the DRC
One set of expectations: common framework for due diligence expectations throughout the entire mineral supply chain from mines until end users
Progressive approach: Couple points – Constructive engagement to avoid potentially harmful impacts, LIKE A DE FACTO EMBARGO FROM THE REGION. THE OECD GUIDANCE RECOGNISES THAT RESPONSIBEL MINING AND TRADE CAN BE AN IMPORTANT FACTRO TO STIMULATE GROWTH AND DEVELOPMENT, AND SEEKS TO provide the tools for companies to engage responsibly in conflict-affected and high-risk areas
ALSO, the GUIDANCE RECOGNISE THAT COMPANIES AT DIFFERENT POINTS IN THE SUPPLY CHAIN HAVE DIFFERENT AND COMPLEMENTARY RESPONSIBILITIES, and therefore offers complementARY DUE DILIGENCE RECOMMENDATIONS
The Supplement on Gold, like the rest of the Guidance, applies to all companies in the gold supply chain, frtom the mine to consumer
It differentiates between “upstream” and “downstream” companies:
“Upstream companies” refers to all the companies between the mine and the refiner, e.g. mining companies, local exporters, traders of unrefined gold, recyclers, refiners.
“Downstream” companies refers to all companies after the refiner until the consumer, e.g. jewellers, bullion banks, industrial users of gold.
That brings us to the Third DD step, which deals with how companies should manage the risk once identified.
Key points: You‘re in Step 3 if you‘ve identified red flags or can‘t rule them out. The aim of Step 3 is to mitigate the risks in the relevant gold supply chain/s that have been identified.
Please note for step 3 there are no general recommmendations.
Specific Recommendations
Upstream companies should:
Report findings to designated senior management, outlining the information gathered and the actual and potential risks identified in the supply chain risk assessment
Enhance engagement with suppliers and the internal systems of transparency, information collection and control over the gold supply chain from Step 1(C). Upstream companies should:
Establish a chain of custody and/or traceability system that collects and maintains disaggregated information outlined in Step 2, Section I and II, (C) for all gold input and output from a red flagged supply chain.
Enhance physical security practices as appropriate to the circumstances (e.g. security of transport, sealing in tamper-proof containers, etc.) over any discrepancies noted in mine production and capacity, processing production and capacity, or information provided by suppliers on gold shipments.
Physically segregate and secure any shipment for which there is an identified risk of association with conflict and serious abuses of human rights.
Incorporate the right to conduct unannounced spot-checks on suppliers and have access to their relevant documentation into commercial contracts and/or written agreements with suppliers which can be applied and monitored.See steps 2-5 for information on monitoring suppliers and managing non-compliance.
For every gold input, share the following information gained and maintained by the assessment team throughout the upstream supply chain
Devise and adopt a risk management plan. Companies should adopt a supply chain risk management plan that outlines the company responses to risks identified in Step 2 in conformity to Annex II of the Guidance.
Companies may manage risk by either
(i) continuing trade throughout the course of measurable risk mitigation efforts;
(ii) temporarily suspending trade while pursuing ongoing measurable risk mitigation; or
(iii) disengaging with a supplier in cases where mitigation appears not feasible or unacceptable.
To determine and devise a risk management strategy, companies should:
Review the model supply chain policy on gold from conflict-affected and high-risk areas in Annex II of the Guidance to determine whether the identified risks should be mitigated by continuing, suspending or termination of the relationship with a supplier through measurable risk mitigation. Measurable risk mitigation should aim to promote significant and measurable improvement within six months from the adoption of the risk management plan.
The model policy in Annex I DEFINES THE PROPER RISK MITIGATION STRATEGY FOR COMPANIES TO TAKE IF ANY CIRCUMSTANCES INCONCSITENT WITH THE POLICY ARE FOUND IN THE SUPPLY CHAIN.
3 SITUATIONS WHERE A COMPANY IS EXPECTED TO DISENGAGE COMPLETELY WITH A SUPPLIER OR CERTAIN SUPPLY CHAIN
Sourcing from suppliers that provides direct or indirect support to illegal armed groups
Sourcing from suppliers that contribute to “serious abuses” associated with the extraction and trade of minerals in conflict areas
THE POLICY RECOMMENDS THAT COMPANIES DEVELOP AND IMPLEMENT A RISK MITIGATION STRATEGY, WORKING WITH SUPPLIERS, IN ALL OTHER RISKS ASSOCIATED WITH MINERAL EXTRACTION AND TRADE IN CONFLICT AREAS, INCLUDING DIRECT OR INDIRECT SUPPORT TO ARMY. THIS IS PART OF THE “CONSTRUCTIVE APPROACH” I MENTIONED – CONTINUING ENGAGEMENT IN THE REGION TO AVOID AHRMFUL CONSEQUENCES OF A DE FACTO EMBARGO
Key points: work out how to manage the risks and keep monitoring the situtation.
Further recommendations for Upstream companies are to:
D. Implement the risk management plan, monitor and track performance of risk mitigation, report back to designated senior management and consider suspending or discontinuing engagement with a supplier after failed attempts at mitigation, in conformity with the recommended risk management strategies outlined in Annex II.
implement, monitor and track performance of risk mitigation in cooperation and/or consultation with local and central authorities, upstream companies, international or civil society organisations and affected third parties as appropriate.
Upstream companies may wish to establish or support the creation of community- monitoring networks to monitor or track performance of risk mitigation.
E. Undertake additional fact and risk assessments for risks requiring mitigation, or after a change of circumstances.
Supply chain due diligence is a dynamic process and requires on-going risk monitoring.
After implementing a risk mitigation strategy, companies should repeat Step 2 to ensure effective management of risk.
Additionally, any change in the company’s supply chain may require some steps to be repeated in order to prevent or mitigate adverse impacts.
THE fourth step of the OECD DD is to Carry out independent third-party audits of smelter’s due diligence, or in the case of downstream co’s ensure that the smelter audit is carried out.
Key points: Step 4 audits are aimed at refiners. An audit of refiners’ due diligence practices aims to verify the key suppliers to downstream supply chains. Industry programs are developing audit standards / certification programs for refiners to provide the relevant assurance.
The scope of the audit
Audit criteria:
Audit activities:
AS WITH ALL RECOMMENDATiONS IN THE GUIDANCE, THIS AUDIT MAY BE CARRIED OUT THROUGH INDUSTRY INITIATIVES, LIKE THE CFS PROGRAM OR THE ITRI SUPLY CHAIN INITIATIVE, SO LONG AS THOSE INITIATIVES ARE consistent WITH the standards and processes of the OECD DD Guidance
Please note, even though the OECD DDG has put step 4 as a general recommendation, it is only addressed to the refiner
In addition, although the OECD DDG requires an audit at the refiner level, it is not intended to be an auditable ‘Standard’. This is why one rather talks of conforming to the OECD DDG rather than complying with it.
General recommendations:
Plan an independent third party audit to verify the implementation of refiner’s due diligence practices for responsible supply chains of gold from conflict-affected and high-risk areas.
The publication recommendation comes from a sub-item of A. and is the only difference between the OECD DDG and the RJC CoC.
Implement the audit in accordance with the audit scope, criteria, principles and activities set out above. All actors in the supply chain should cooperate to ensure that the auditing is carried out in accordance with audit scope, criteria, principles and activities.
Step 4 specific recommendation for upstream companies
Allow access to company sites and relevant documentation and records of supply chain due diligence practices
Facilitate contact and logistics with transporters and suppliers selected by the audit team (including on-site visits)
Finally, the last step of OECD DD recommends that companies Report annually on supply chain due diligence
BASICALLY, THIS SIMPLY MEANS REPORTING ON THE EFFORTS MADE from
The five steps include:
Establish strong company management systems
2. Identify and assess risk in the supply chain.
Type of Gold - 3 types
Identify origin – 3 types, Mined Gold (Mine origin); Recyclable gold (point where turned back for value), Grandfathered Stocks
With that information, identify the exitence of red flags in the supply chain – listed in the Supplement on gold
If red flags identifed, further and in-depth risk assessment on those sources. Mined Gold Supplement has an array of informaiton to be collected on the gold, specific to ASM or LSM gold, mine of orighin, points where gold is traded, entities in the supply chain and KYC info, and qualitiative cricumstances of minein and trade – look for risks as per the model policy
Recyclable gold – use a risk based approach to look for posisbloe laundering through recyclable channels.
3. Design and implement a strategy to respond to identified risk. In the Gold supplement, this step has also been further segmented to
4. Carry out independent third-party audits of refiner/smelter’s due diligence.
SO it’s important to distinguish between the type of audit recommended in the Guidance and the ICGLR audit
5. Report annually on supply chain due diligence
Focus is Gold – please refer to the booklet “Gold Sector industry Guide” – available in English and French
Folks are on hand from the gold and 3T initiatives to answer your questions
BUT All industry and sector initiatives work under the principle that responsible sourcing is everyone’s responsibility
On-going efforts aim to establish mutual recognition between industry and sector initiatives to reduce confusion and the burden of evaluations and audits across the supply chain
The five steps include:
Establish strong company management systems
2. Identify and assess risk in the supply chain.
Type of Gold - 3 types
Identify origin – 3 types, Mined Gold (Mine origin); Recyclable gold (point where turned back for value), Grandfathered Stocks
With that information, identify the exitence of red flags in the supply chain – listed in the Supplement on gold
If red flags identifed, further and in-depth risk assessment on those sources. Mined Gold Supplement has an array of informaiton to be collected on the gold, specific to ASM or LSM gold, mine of orighin, points where gold is traded, entities in the supply chain and KYC info, and qualitiative cricumstances of minein and trade – look for risks as per the model policy
Recyclable gold – use a risk based approach to look for posisbloe laundering through recyclable channels.
3. Design and implement a strategy to respond to identified risk. In the Gold supplement, this step has also been further segmented to
4. Carry out independent third-party audits of refiner/smelter’s due diligence.
SO it’s important to distinguish between the type of audit recommended in the Guidance and the ICGLR audit
5. Report annually on supply chain due diligence
I’d like to now turn to the ICGLR to provide a brief over view and this will be followed by our partners from ITRI who are focused on a 3T programme on the ground (which includes traceability and other components of DD).
Thank you for listening!