RESPONSIBLE JEWELLERY COUNCIL RECOGNISES RELEASE OF
FINAL RULE FOR DODD-FRANK SECTION 1502 ON CONFLICT MINERALS AND ENCOURAGES USE
OF
RJC CHAIN-OF-CUSTODY CERTIFICATION FOR GOLD
SOURCING
The release by the US
Security and Exchange Commission (SEC) of the final rule implementing Section
1502 on Conflict Minerals in the Dodd-Frank Wall Street Reform and Consumer Protection Act[1] turns attention to the role of
industry programmes in supporting compliance. The Responsible Jewellery Council
(RJC) has worked with a wide range of stakeholders since 2010 to develop a
certification standard aimed at responsible sourcing of precious metals and at
assisting affected companies’ efforts to comply with Section 1502 of the Act.
The RJC Chain-of-Custody (CoC) standard was released in March 2012[2] and three gold refineries in the USA,
Switzerland and Hong Kong have already been independently audited and certified
under this program.[3] More companies are expected to be
certified in coming months.
The RJC has reviewed
the Section 1502 final rule and does not anticipate any changes to the
Chain-of-Custody Standard are necessary at this time. The CoC Standard has been
designed to support the reasonable inquiry and due diligence processes in the
gold supply chain required under the rule. RJC participated actively in the
multi-stakeholder development of the OECD Due Diligence Guidance for
Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk
Areas, particularly the Supplement on Gold[4]. The Section 1502 rule
explicitly recognises the OECD Supplement on Gold as an internationally recognized due diligence framework for
fulfilling Dodd-Frank conflict mineral requirements. RJC’s Chain-of-Custody
Standard is aligned with the OECD Guidance and the RJC has recorded webinars
available on its website to assist supply chain participants with information
and awareness-raising about the OECD Guidance.
Analysis of the
Section 1502 rule shows that the types of gold (mined, recycled and scrap, and
existing stocks) sourced by companies have specific disclosure and due diligence
implications, each of which can be met though use of RJC’s Chain-of-Custody
Standard. All gold transferred by RJC
Chain-of-Custody Certified Entities is “DRC conflict-free” as defined by the
Dodd Frank Act. To support ‘reasonable country of origin inquiries’,
information on whether gold-bearing shipments contain mined, recycled and/or
grandfathered (existing stocks) is provided to customers of RJC CoC Certified
businesses via CoC Transfer Documents. If any gold originated in or was
transported through the DRC and adjoining countries, all CoC Transfer Documents
for that gold must continue to identify the country/ies of origin, along with
the refiner/s. A conflict-free declaration is provided which assures customers
that due diligence in accordance with the OECD Guidance has already been carried
out to confirm that the gold did
not finance or benefit illegal armed groups.
Under the Section 1502
rule, existing stocks and inventories of
gold are considered ‘outside the supply chain’ before January 31 2013 and are
exempted from application of the rule. The RJC Chain-of-Custody Standard adopts
the same cut-off date for existing stocks of gold (which RJC has termed
‘grandfathered’) as the OECD Supplement on Gold (1 January 2012). The SEC has
allowed a later cut-off date as a transition period to permit market participants additional time to
move or refine any existing stocks of gold in accordance with the rule. In practice, the 13 month
difference in cut-off dates between the OECD and SEC should not be too difficult
for companies to manage. For companies sourcing gold between January 1 2012 and
January 31 2013 under the RJC CoC Standard, the date of receipt of CoC Gold will
be reliably represented in CoC Transfer Documents. This period before
application of the SEC rule formally commences can thus be used by companies to
establish relevant sourcing and records systems before any conflict minerals
disclosure requirements become effective for them.
In addition to conflict-free
assurance, the RJC’s approach to responsible sourcing encompasses a wide range
of environmental, social, human rights and business ethics standards in the
precious metals supply chain. Chain-of-Custody certified businesses must meet
the RJC’s requirements for responsible business practices, as laid out in the
RJC Code of Practices[5]. Both RJC Member
Certification and Chain-of-Custody Certification are achieved through
independent, third-party audits by auditors formally accredited by
RJC.
Companies can use RJC
Chain-of-Custody Certification to support compliance with Section 1502
by:
-
Sourcing from RJC CoC
Certified Refiners: gold refiners are
a key point of due diligence in gold supply chains. Any business using gold can
source from RJC CoC Certified Refiners - companies don’t have to be part of the
jewellery industry or an RJC member to do so. CoC Certified Refiners can supply
conflict-free gold and provide reliable representations regarding mined,
recycled and/or grandfathered material to support ‘reasonable country of origin
inquiries’ and any determined disclosure requirements.
-
Achieving CoC
Certification: companies in the gold
jewellery supply chain, such as miners, refiners, jewellery manufacturers, and
retailers, can seek CoC Certification as an additional level of assurance about
their due diligence practices for their own reporting requirements or to provide
verifiable information to customers. CoC Certification can be used to assure
continuing custody of conflict-free gold sourced from refiners or to generate
audited records for grandfathered gold (existing stocks) that manufacturers
source directly, for example from banks.
-
Encouraging responsibly
mined gold: the aims of Section 1502
and the OECD Due Diligence Guidance are to achieve improved human rights
conditions on the ground in the Democratic Republic of the Congo. Responsible
mining practices in both industrial and artisanal and small-scale mining (ASM)
are an essential platform to these efforts. RJC Certification can help drive
uptake of improved practices and voluntary standards in the mining sector more
broadly. RJC is working with artisanal mining organisations to support work in
the ASM sector.[6]
No comments:
Post a Comment