Concerned with potential links between gold and humanitarian conflict in politically unstable geographic areas, the World Gold Council (in conjunction with consultation from every point in the gold supply chain and foreign governments) created the Conflict-Free Gold Standard (CFGS) in 2012.
What is the Conflict-Free Gold Standard?
The CFGS is 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, benefit or contribute to human rights abuses, breaches of international humanitarian law, or unlawful armed conflict. In other words, this operational framework helps ensure that this critical resource is collected safely, legally, and ethically.
Ensuring Your Gold is Mined with Ethical Practices
Similar to “blood diamonds,” the gold industry getting mixed up in civil conflict is a huge issue — in fact it’s part of why Manhattan Gold & Silver doesn’t accept mined materials from Africa. Fortunately, the Conflict-Free Gold Standard (which builds on other efforts like environmental and health and safety standards) provides a transparent methodology that reassures refiners, buyers, and even everyday-consumers that the gold they’re dealing with hasn’t contributed to human rights abuses. But it’s not just the gold industry that benefits – regions where the gold is sourced also benefit.
For countries with human rights issues and/or violence, these problems are not usually encompassing the entire country. Rather than avoiding the country entirely, companies can follow the Conflict-Free Gold Standard to ensure that they work in the country and contribute to its economy without contributing to armed conflict or human rights abuses. When responsibly undertaken, gold mining and refining can have a positive impact on the socio-economic development of countries in the form of:
- employment opportunities
- tax revenues
- improved infrastructure
- increased foreign direct investment and foreign exchange
RELATED: History of the World Gold Council
Recommended Five Part Process
To provide guidance for companies on how to mine gold responsibly – especially in high risk regions – the Conflict-Free Gold Standard can be generally described as a five-part process.
Conflict Assessment
First and foremost, the geographic area where gold operations are to take place is assessed for international sanctions and civil conflict.
Company Assessment
This applies to the company proposing to extract and refine gold in the area. It must demonstrate that it has the right policies in place (security, commitment to human rights, community engagement, whistle-blower programs, and more) to operate responsibly in the area.
Commodity Assessment
This refers to tracking the gold produced in the area. The purpose of the commodity assessment is to create appropriate management systems to ensure that the gold is secure, that theft is minimized, and that transporters of the gold are vetted and committed to conflict-free gold.
Externally Sourced Gold Assessment
It isn’t common, but sometimes gold from somewhere else is brought onto the site in question. This part of the CFGS ensures that externally sourced gold is also conflict-free.
Statement of Conformance
Finally, the mining company makes a declaration to refiners and other gold industry members that they comply with the CFGS.
Corporate transparency is required to remain compliant with the CFGS. While the company is operating in the region, they must adhere to 3rd party auditing and transparent public disclosures. Because of this, if a company becomes non-conformant with the CFGS, every other member of the gold supply chain is notified – which can seriously impact business and profitability. Fortunately, miners, refiners, and international NGOs all describe the CFGS as a major step forward in providing trust and transparency in the gold supply chain.
