As a signer of the Clean Gold Initiative (this “Agreement”), GoldChain recognizes the need for strict international standards for human rights, fair trade, and compliance with OECD regulations for gold mining and trading, and guided by the principles of equity and responsibility, hereby agrees to abide by the Clean Gold Initiative, in pursuit of the objective of responsible and sustainable gold production and trade, and in recognition of the specific needs and special circumstances of developing country parties and vulnerable communities affected by gold mining, and affirming the importance of transparency, education, public participation, and cooperation at all levels to achieve this objective, has agreed to the practices as follows:
1. On Conflict-Affected and High-Risk Areas
Seek to generate income, growth, and prosperity, but also to sustain livelihoods and foster local development in Conflict-affected and high-risk areas (CAHRAs).
CAHRAs are identified by the presence of armed conflict, widespread violence or other risks of harm to people. Armed conflict may take a variety of forms, such as a local or international conflict, which may involve two or more states, or may consist of wars of liberation, insurgencies, or civil wars. High risk areas may include areas of political instability or repression, institutional weakness, insecurity, collapse of civil infrastructure, and widespread violence. Such areas are often characterized by civil wars and violations of national and international laws. In such locales, companies may be at risk of contributing to or being associated with significant adverse impacts, including serious human rights abuses and conflict.
2. Supply Chain Due Diligence
Apply due diligence as an on-going, proactive and reactive process through which Parties can ensure that they respect human rights and do not contribute to conflict. Through world-class due diligence, this Agreement ensures parties observe international law and comply with domestic laws, including those governing the illicit trade in minerals and United Nations sanctions.
Risk-based due diligence refers to the steps we take to identify and address actual and potential inherent risks in order to prevent or mitigate adverse impacts associated with its activities or sourcing decisions.
Due diligence is structured around the steps that Parties take to:
2.1 Identify the factual circumstances involved in the extraction, transport, handling, trading, processing, smelting, refining and alloying, manufacturing or selling of products that contain minerals originating from conflict-affected and high-risk areas;
2.2 Identify and assess any actual or potential risks by evaluating the factual circumstances against standards set out in the company’s supply chain policy;
2.3 Prevent or mitigate the identified risks by adopting and implementing a risk management plan. These may result in a decision to continue trade throughout the course of risk mitigation efforts, temporarily suspend trade while pursuing ongoing risk mitigation, or disengage with a supplier either after failed attempts at mitigation or where the company deems mitigation not feasible or the risks unacceptable.
3. Risk Management
Manage risk throughout the supply chain. Inherent risks are defined in relation to the potentially adverse impacts of gold mining and trading operations, which result from activities or relationships within the industry, including suppliers and other entities in the supply chain. Adverse impacts may include harm to people (i.e. external impacts), or reputational damage or legal liability for the company (i.e. internal impacts), or both.
Such internal and external impacts are often interdependent, with external harm coupled with reputational damage or exposure to legal liability. This risk-based approach also helps to scale the due diligence exercise to the size of our activities or supply chain relationships.
4. Self-Certification Mechanism (SCM)
Development of a proprietary Upstream & Downstream Chain of Custody Supply Chain Management System, Anti Money Laundering Compliance Program, and SCM, which ensures that all strategic minerals and precious metals are sourced in adherence with international standards.
An SCM ensures consistent implementation of due diligence and risk control requirements including:
4.1 Scope, clear responsibilities, and escalation channels;
4.2 Identification, assessment, and criteria for high-risk gold supply chain;
4.3 Know-Your-Customer (KYC) process;
4.4 Monitoring and surveillance of transactions;
4.5 Mandatory trainings for relevant staff who are exposed directly in the supply chain.
All staff involved in the supply chain must strictly implement and comply with this policy.
5. International Compliance Standards
Adherence to the following international compliance standards:
5.1 Annex II of the Organisation for Economic Cooperation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from CAHRAs;
5.2 Section 1502 of U.S. Dodd Frank Act;
5.3 Regional Certification Mechanism (RCM) of the International Great Lakes Region (ICGLR) 2nd Ed.;
5.4 Responsible Jewelry Council (RJC) Standards;
(e) Responsible Mineral Initiative (RMI) Responsible Minerals Assurance Process;
5.5 DMCC Practical Guidance for Market Participants in the Gold and Precious Metals Industry v.1 released April, 2012 (the “DMCC Guidance”);
5.6 DMCC Rules for Risk Based Due Diligence in the Gold and Precious Metals Supply Chain (the “DMCC Rules for RBD-GPM”);
5.7 LBMA Responsible Gold Guidance;
5.8 Federal Decree-law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Illegal Organisations & Cabinet Decision No. 10 of 2019.
6. Non-State Armed Groups
Ensuring the mineral supply chain is free of support for non-state armed groups and public or private security forces, including international armed forces who:
6.1 Illegally control mine sites or otherwise control transportation routes, points where minerals are traded and upstream actors in the supply chain;
6.2 Illegally tax or extort money or minerals at points of access to mine sites, along transportation routes or at points where minerals are traded;
6.3 Illegally tax or extort intermediaries, export companies or international traders.
7. Human Rights
Targeting the following serious human rights abuses:
7.1 Any forms of torture, cruel, inhuman and degrading treatment;
7.2 Any forms of forced or compulsory labor, which means work or service which is exacted from any person under the menace of penalty and for which said person has not offered himself voluntarily;
7.3 The worst forms of child labor;
7.4 Other gross human rights violations and abuses such as widespread sexual violence;
7.5 War crimes or other serious violations of international humanitarian law, crimes against humanity or genocide.
8. 5-Step Framework
Review the choice of suppliers and sourcing decisions integrating the following 5-step framework into our risk -based due diligence SCM for responsible supply chains of minerals from CAHRAs:
8.1 Establish Strong Company Management Systems:
(a) Adopt, and clearly communicate to suppliers and the public, a Company policy for the supply chain of minerals originating from CAHRAs. This policy has incorporated the standards against which due diligence is to be conducted, consistent with the standards set forth in the model supply chain policy in Annex II of the OECD Due Diligence Guidance for Responsible supply Chains of Minerals from CAHRAs and the RCM of the ICGLR 2nd Ed.;
(b) Structure internal management to support supply chain due diligence;
(c) Establish a system of controls and transparency over the mineral supply chain. This includes a chain of custody or a traceability system or the identification of upstream actors in the supply chain. This may be implemented through participation in industry-driven programs;
(d) Strengthen company engagement with suppliers. A supply chain policy should be incorporated into contracts and/or agreements with suppliers. Where possible, assist suppliers in building capacities with a view to improving due diligence performance;
(e) Establish a Company-level, or industry-wide, grievance mechanism as an early-warning risk-awareness system.
8.2 Identify & Assess Risk in the Supply Chain:
(a) Identify risks in their supply chain as recommended in Annex II of the OECD Due Diligence Guidance for Responsible supply Chains of Minerals from CAHRAs and the RCM of the ICGLR 2nd Ed.;
(b) Assess risks of adverse impacts in light of the standards of their supply chain policy consistent with due diligence recommendations in Annex II of the OECD Due Diligence Guidance for Responsible supply Chains of Minerals from CAHRAs and the RCM of the ICGLR 2nd Ed.
8.3 Design & Implement Risk Response Strategy:
(a) Report findings of the supply chain risk assessment to the designated senior management of the Company;
(b) Devise a strategy for risk management 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 after failed attempts at mitigation or where a Company deems risk mitigation not feasible or unacceptable. To determine the correct strategy, companies should review Annex II (Model Supply Chain Policy for Responsible Global Supply Chains of Minerals from CAHRAs) and the RCM of the ICGLR 2nd Ed., while considering their ability to influence, and where necessary take steps to build leverage, over suppliers who can most effectively prevent or mitigate the identified risk;
(c) Implement the risk management plan, monitor and track performance of risk mitigation efforts and report back to designated senior management. This may be done in cooperation and/or consultation with local and central government authorities, upstream companies, international or civil society organizations and affected third-parties where the risk management plan is implemented and monitored in conflict-affected and high-risk areas;
(d) Undertake additional fact and risk assessments for risks requiring mitigation, or after a change of circumstances.
8.4 Facilitate Third-Party Supply Chain Audit:
Carry out independent third-party audit of supply chain due diligence at identified points in the supply chain. AGE, at identified points (as indicated in the OECD Supplements) and within the scope of the RCM of the ICGLR 2nd Ed. shall have their supply chain due diligence practices audited by independent third parties (such as ICGLR). Such audits shall be verified by an independent institutionalized mechanism.
8.5 Report on Supply Chain Due Diligence:
Report on supply chain due diligence. AGE shall, in accordance with the RCM of the ICGLR 2nd Ed., publicly report on their supply chain due diligence policies and practices and may do so by expanding the scope of their sustainability, corporate social responsibility or annual reports to cover additional information on mineral supply chain due diligence.
9. 5-Point ASM Due Diligence
Perform comprehensive ASM due diligence regarding:
9.1 Serious abuses associated with mineral trading. While sourcing from, or operating in CAHRAs, we will neither tolerate nor by any means profit from, contribute to, assist with, or facilitate the commission by any party of:
(a) Any forms of torture, cruel, inhuman and degrading treatment;
(b) Any forms of forced or compulsory labor, which means work or service which is exacted from any person under the menace of penalty and for which said person has not offered himself voluntarily;
(c) The worst forms of child labor;
(d) Other gross human rights violations and abuses such as widespread sexual violence;
(e) War crimes or other serious violations of international humanitarian law, crimes against humanity or genocide.
9.2 Support of non-state armed groups. We will not tolerate any direct or indirect support to non-state armed groups through the extraction, transport, trade, handling or export of minerals. “Direct or indirect support” to non-state armed groups through the extraction, transport, trade, handling or export of minerals includes, but is not limited to: procuring minerals from, making payments to or otherwise providing logistical assistance or equipment to, non-state armed groups or their affiliates who:
(a) Illegally control mine sites or otherwise control transportation routes, points where minerals are traded and upstream actors in the supply chain;
(b) Illegally tax or extort money or minerals at points of access to mine sites, along transportation routes or at points where minerals are traded;
(c) Illegally tax or extort intermediaries, export companies or international traders.
9.3 Public or private security forces:
(a) Agree to eliminate direct or indirect support to public or private security forces who illegally control mine sites, transportation routes and upstream actors in the supply chain, illegally tax or extort money or minerals at point of access to mine sites, along transportation routes or at points where minerals are traded, or illegally tax or extort intermediaries, export companies, or international traders;
(b) Recognize that the role of public or private security forces at the mine sites and/or surrounding areas and/or along transportation routes should be solely to maintain the rule of law, including safeguarding human rights, providing security to mine workers, equipment and facilities, and protecting the mine site or transportation routes from interference with legitimate extraction and trade;
(c) Where we or any company in our supply chain contract public or private security forces, we commit to or we will require that such security forces will be engaged in accordance with the Voluntary Principles on Security and Human Rights. In particular, we will support or take steps to adopt screening policies to ensure that individuals or units of security forces that are known to have been responsible for gross human rights abuses will not be hired;
(d) Support efforts, or take steps to engage with central or local authorities, international organizations. and civil society organizations to contribute to workable solutions on how transparency, proportionality and accountability in payments made to public security forces for the provision of security could be improved;
(e) Support efforts, or take steps to engage with local authorities, international organizations, and civil society organizations to avoid or minimize the exposure of vulnerable groups, in particular artisanal miners where minerals in the supply chain are extracted through ASMs, to adverse impacts associated with the presence of security forces, public or private, on mine sites.
9.4 Fraud, money laundering, and government fees:
(a) Not offer, promise, give, or demand any bribes, and will resist the solicitation of bribes to conceal or disguise the origin of minerals, to misrepresent taxes, fees, and royalties paid to governments for the purposes of mineral extraction, trade, handling, transport, and export;
(b) Support efforts, or take steps, to contribute to the effective elimination of money laundering where we identify a reasonable risk of money-laundering resulting from, or connected to, the extraction, trade, handling, transport or export of minerals derived from the illegal taxation or extortion of minerals at points of access to mine sites, along transportation routes or at points where minerals are traded by upstream suppliers;
(c) Ensure that all taxes, fees, and royalties related to mineral extraction, trade and export from CAHRAs are paid to governments and, in accordance with the company’s position in the supply chain, we commit to disclose such payments in accordance with the principles set forth under the Extractive Industry Transparency Initiative (EITI).
9.5 Risk management in ASM due diligence:
(a) Immediately suspend upstream suppliers where we identify a reasonable risk that they are sourcing from, or linked to, any party committing serious abuses associated with mineral extraction, transport, or trade, or providing direct or indirect support to non-state armed groups;
(b) In accordance with the specific position of the company in the supply chain, we will immediately devise, adopt, and implement a risk management plan with upstream suppliers and other stakeholders to prevent or mitigate the risk of direct or indirect support to public or private security forces, where we identify that such a reasonable risk exists. In such cases, we will suspend or discontinue engagement with upstream suppliers after failed attempts at mitigation within six months from the adoption of the risk management plan. Where we identify a reasonable risk of activities inconsistent with the above, we will respond in the same vein;
(c) In accordance with the specific position of the company in the supply chain, we commit to engage with suppliers, central or local governmental authorities, international organizations, civil society and affected third parties, as appropriate, to improve and track performance with a view to preventing or mitigating risks of adverse impacts through measurable steps taken in reasonable timescales. We will suspend or discontinue engagement with upstream suppliers after failed attempts at mitigation.
10. The Clean Gold Pledge
We value the trust our organization has earned and take pride in our commitment to The Clean Gold Initiative through our Proprietary Upstream & Downstream Chain of Custody Supply Chain Management System, Anti-Money Laundering Compliance Program, and SCM;
We recognize that risks of significant adverse impacts may be associated with extracting, trading, handling, and exporting minerals from CAHRAs, and we recognize that we have the responsibility to respect human rights and not contribute to conflict. We commit to adopt, widely disseminate, and incorporate contracts and agreements with suppliers the following policy on responsible sourcing of minerals from CAHRAs, as representing a common reference for conflict-sensitive sourcing practices and suppliers’ risk awareness from the point of extraction until end user;
We commit to refraining from any action which contributes to the financing of conflict and we commit to comply with relevant United Nations sanctions resolutions, RCM of the ICGLR 2nd Ed., OECD Due Diligence Guidance for Responsible supply Chains of Minerals from CAHRAs or, where applicable, domestic laws implementing such mechanisms, standards, and/or resolutions. This acknowledgement, moreover, further covenants that it is compliant and incorporates by reference the DMCC Guidance and the DMCC Rules for RBD-GPM.
11. Acknowledgement
IN WITNESS WHEREOF, the undersigned, being duly authorized to that effect, have signed this Agreement.
GoldChain (Virtuo Systems LLC)
Agreed to: 16 April 2023