The demand for gold has been on the rise, resulting in its price increasing by four times in the ... more The demand for gold has been on the rise, resulting in its price increasing by four times in the last decade. New exploration activities of the gold sector have certainly followed, particularly among artisanal and small-scale mining (ASM), a sector that is fraught with problems, ranging from human rights issues to environmental degradation.As the main gold trading hub and home to four of the largest gold refineries in the world, Switzerland has been benefiting from the expansion of this sector. However, in order to keep this prominent position, Switzerland must respond to two increasing challenges:First, the increasing demand from Asian buyers, which has resulted in Dubai and Singapore becoming more important gold trading centers. Secondly, the increasing pressures from civil society and new regulatory measures from across the Western world, for instance the report “A Golden Racket” from the Berne Declaration and the United States Dodd-Frank Act.Consequently, new actors were incorporated into the gold value chain in efforts to enhance traceability and transparency. Therefore, this research investigates what Switzerland is currently doing to guarantee traceability and transparency of its gold. In other words, how Switzerland plans to remain a relevant player in the gold supply chain.The research focuses on the bourgeoning field of voluntarycertification schemes, as possible solutions to sustainability concerns and as a way for Switzerland to edge its competitors as the front-runner in the gold sector. In addition to the general overviews of certification schemes, this report specifically addresses traceability and transparency of the gold supply chain coming from ASM sources in Peru. The research was guided by the actor system theory and the data was collected through semi- structured interviews, with at least one representative of each actor directly involved in the gold supply chain, as well as secondary sources. After interviewing at least one representative from the gold supply chain - except refineries - this report not only found an abundant number of certification schemes (e.g. Responsible Jewellery Council,Fairtrade and Fairmined Standard), but that each one provides their own answer to the traceability and transparency issue at specific stages of the value chain. The schemes are also adapted to a specific type of extraction (small-scale, medium and large- scale; legal or informal/illegal). The recently launched Better Gold Initiative (BGI) -a partnership between the Swiss government, certification schemes and other gold sector actors -can be seen as a way for certification schemes to complement each other, hence promoting cooperation towards transparency and traceability along the whole gold supply chain. The BGI could also ensure Switzerland reasserts itself in the gold sector as a leading player in sustainable gold, as well as being used as a policy measure to respond to the increasing public and regulatory measures coming from other Western countries. The BGI has a lot of potential to change the current governance system in place in the gold supply chain. The institution connects actors that previously did not relate, while creating a platform for addressing challenges found in the implementation mechanisms of voluntary gold certification schemes.However the institution is still in its pilot phase, therefore its impact cannot be thoroughly measured. Additionally, the institution does not include allactors involved in the gold production system (i.e. banks, informal/ illegal miners), a requirement that needs to be addressed. The research has identified key issues that still need to be addressed: how to mitigate the potential competition among the various existing certification schemes, how to ensure that certification schemes are respecting local and national institutional frameworks, how to guarantee that certifications have a social and environmental impact on the ASM communities, and making sure the premium (extra price) paid to the ASM sources is high enough to ensure participation from the producer as well as other actors along the supply chain. Indeed, as certification schemes are voluntary and the economic incentive to participate remains often low both for technical reasons linked to the nature of the gold industry (e.g. distance to trading hub, high price of gold, disregard from the environmental impact) and for the very nature of the certifications (e.g. External costs and monitoring the certification; internal cost to comply with the extra administrative requirements). Therefore, as such, certifications often do not provide enough incentives for all stakeholders to join and adhere to the standards, especially those stakeholders –often located in the producing countries - the most impacted by implementing the social and environmental indicators in the certification schemes. Additionally, in order to provide real economic incentives, voluntary efforts would also need to be supported by regulatory mechanisms both in producing countries and consuming countries to ensure implementation of commitments. At the end of this report, the reader will find recommendations for Swiss NGOs to provide capacity building for artisanal and small-scale mining organizations through formalization, raising awareness in Switzerland to enhance consumer knowledge about the gold production system and the consequences it brings, as well as pushing for mandatory regulations for actors directly and indirectly involved in the Swiss gold supply chain. This report was written for SWISSAID Genève, therefore geared towards Swiss NGOs involved in the gold sector.
The demand for gold has been on the rise, resulting in its price increasing by four times in the ... more The demand for gold has been on the rise, resulting in its price increasing by four times in the last decade. New exploration activities of the gold sector have certainly followed, particularly among artisanal and small-scale mining (ASM), a sector that is fraught with problems, ranging from human rights issues to environmental degradation.As the main gold trading hub and home to four of the largest gold refineries in the world, Switzerland has been benefiting from the expansion of this sector. However, in order to keep this prominent position, Switzerland must respond to two increasing challenges:First, the increasing demand from Asian buyers, which has resulted in Dubai and Singapore becoming more important gold trading centers. Secondly, the increasing pressures from civil society and new regulatory measures from across the Western world, for instance the report “A Golden Racket” from the Berne Declaration and the United States Dodd-Frank Act.Consequently, new actors were incorporated into the gold value chain in efforts to enhance traceability and transparency. Therefore, this research investigates what Switzerland is currently doing to guarantee traceability and transparency of its gold. In other words, how Switzerland plans to remain a relevant player in the gold supply chain.The research focuses on the bourgeoning field of voluntarycertification schemes, as possible solutions to sustainability concerns and as a way for Switzerland to edge its competitors as the front-runner in the gold sector. In addition to the general overviews of certification schemes, this report specifically addresses traceability and transparency of the gold supply chain coming from ASM sources in Peru. The research was guided by the actor system theory and the data was collected through semi- structured interviews, with at least one representative of each actor directly involved in the gold supply chain, as well as secondary sources. After interviewing at least one representative from the gold supply chain - except refineries - this report not only found an abundant number of certification schemes (e.g. Responsible Jewellery Council,Fairtrade and Fairmined Standard), but that each one provides their own answer to the traceability and transparency issue at specific stages of the value chain. The schemes are also adapted to a specific type of extraction (small-scale, medium and large- scale; legal or informal/illegal). The recently launched Better Gold Initiative (BGI) -a partnership between the Swiss government, certification schemes and other gold sector actors -can be seen as a way for certification schemes to complement each other, hence promoting cooperation towards transparency and traceability along the whole gold supply chain. The BGI could also ensure Switzerland reasserts itself in the gold sector as a leading player in sustainable gold, as well as being used as a policy measure to respond to the increasing public and regulatory measures coming from other Western countries. The BGI has a lot of potential to change the current governance system in place in the gold supply chain. The institution connects actors that previously did not relate, while creating a platform for addressing challenges found in the implementation mechanisms of voluntary gold certification schemes.However the institution is still in its pilot phase, therefore its impact cannot be thoroughly measured. Additionally, the institution does not include allactors involved in the gold production system (i.e. banks, informal/ illegal miners), a requirement that needs to be addressed. The research has identified key issues that still need to be addressed: how to mitigate the potential competition among the various existing certification schemes, how to ensure that certification schemes are respecting local and national institutional frameworks, how to guarantee that certifications have a social and environmental impact on the ASM communities, and making sure the premium (extra price) paid to the ASM sources is high enough to ensure participation from the producer as well as other actors along the supply chain. Indeed, as certification schemes are voluntary and the economic incentive to participate remains often low both for technical reasons linked to the nature of the gold industry (e.g. distance to trading hub, high price of gold, disregard from the environmental impact) and for the very nature of the certifications (e.g. External costs and monitoring the certification; internal cost to comply with the extra administrative requirements). Therefore, as such, certifications often do not provide enough incentives for all stakeholders to join and adhere to the standards, especially those stakeholders –often located in the producing countries - the most impacted by implementing the social and environmental indicators in the certification schemes. Additionally, in order to provide real economic incentives, voluntary efforts would also need to be supported by regulatory mechanisms both in producing countries and consuming countries to ensure implementation of commitments. At the end of this report, the reader will find recommendations for Swiss NGOs to provide capacity building for artisanal and small-scale mining organizations through formalization, raising awareness in Switzerland to enhance consumer knowledge about the gold production system and the consequences it brings, as well as pushing for mandatory regulations for actors directly and indirectly involved in the Swiss gold supply chain. This report was written for SWISSAID Genève, therefore geared towards Swiss NGOs involved in the gold sector.
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The research was guided by the actor system theory and the data was collected through semi- structured interviews, with at least one representative of each actor directly involved in the gold supply chain, as well as secondary sources. After interviewing at least one representative from the gold supply chain - except refineries - this report not only found an abundant number of certification schemes (e.g. Responsible Jewellery Council,Fairtrade and Fairmined Standard), but that each one provides their own answer to the traceability and transparency issue at specific stages of the value chain. The schemes are also adapted to a specific type of extraction (small-scale, medium and large- scale; legal or informal/illegal).
The recently launched Better Gold Initiative (BGI) -a partnership between the Swiss government, certification schemes and other gold sector actors -can be seen as a way for certification schemes to complement each other, hence promoting cooperation towards transparency and traceability along the whole gold supply chain. The BGI could also ensure Switzerland reasserts itself in the gold sector as
a leading player in sustainable gold, as well as being used as a policy measure to respond to the increasing public and regulatory measures coming from other Western countries. The BGI has a lot of potential to change the current governance system in place in the gold supply chain. The institution connects actors that previously did not relate, while creating a platform for addressing challenges found in the implementation mechanisms of voluntary gold certification schemes.However the institution is still in its pilot phase, therefore its impact cannot be thoroughly measured. Additionally, the institution does not include allactors involved in the gold production system (i.e. banks, informal/ illegal miners), a requirement that needs to be addressed.
The research has identified key issues that still need to be addressed: how to mitigate the potential competition among the various existing certification schemes, how to ensure that certification schemes are respecting local and national institutional frameworks, how to guarantee that certifications have a social and environmental impact on the ASM communities, and making sure the premium (extra price) paid to the ASM sources is high enough to ensure participation from the producer as well as other actors along the supply chain. Indeed, as certification schemes are voluntary and the economic incentive to participate remains often low both for technical reasons linked to the nature of the gold industry (e.g. distance to trading hub, high price of gold, disregard from the environmental impact) and for the very nature of the certifications (e.g. External costs and monitoring the certification; internal cost to comply with the extra administrative requirements). Therefore, as such, certifications often do not provide enough incentives for all stakeholders to join and adhere to the standards, especially those stakeholders –often located in the producing countries - the most impacted by implementing the social and environmental indicators in the certification schemes. Additionally, in order to provide real economic incentives, voluntary efforts would also need to be supported by regulatory mechanisms both in producing countries and consuming countries to ensure implementation of commitments.
At the end of this report, the reader will find recommendations for Swiss NGOs to provide capacity building for artisanal and small-scale mining organizations through formalization, raising awareness in Switzerland to enhance consumer knowledge about the gold production system and the consequences it brings, as well as pushing for mandatory regulations for actors directly and indirectly involved in the Swiss gold supply chain. This report was written for SWISSAID Genève, therefore geared towards Swiss NGOs involved in the gold sector.
The research was guided by the actor system theory and the data was collected through semi- structured interviews, with at least one representative of each actor directly involved in the gold supply chain, as well as secondary sources. After interviewing at least one representative from the gold supply chain - except refineries - this report not only found an abundant number of certification schemes (e.g. Responsible Jewellery Council,Fairtrade and Fairmined Standard), but that each one provides their own answer to the traceability and transparency issue at specific stages of the value chain. The schemes are also adapted to a specific type of extraction (small-scale, medium and large- scale; legal or informal/illegal).
The recently launched Better Gold Initiative (BGI) -a partnership between the Swiss government, certification schemes and other gold sector actors -can be seen as a way for certification schemes to complement each other, hence promoting cooperation towards transparency and traceability along the whole gold supply chain. The BGI could also ensure Switzerland reasserts itself in the gold sector as
a leading player in sustainable gold, as well as being used as a policy measure to respond to the increasing public and regulatory measures coming from other Western countries. The BGI has a lot of potential to change the current governance system in place in the gold supply chain. The institution connects actors that previously did not relate, while creating a platform for addressing challenges found in the implementation mechanisms of voluntary gold certification schemes.However the institution is still in its pilot phase, therefore its impact cannot be thoroughly measured. Additionally, the institution does not include allactors involved in the gold production system (i.e. banks, informal/ illegal miners), a requirement that needs to be addressed.
The research has identified key issues that still need to be addressed: how to mitigate the potential competition among the various existing certification schemes, how to ensure that certification schemes are respecting local and national institutional frameworks, how to guarantee that certifications have a social and environmental impact on the ASM communities, and making sure the premium (extra price) paid to the ASM sources is high enough to ensure participation from the producer as well as other actors along the supply chain. Indeed, as certification schemes are voluntary and the economic incentive to participate remains often low both for technical reasons linked to the nature of the gold industry (e.g. distance to trading hub, high price of gold, disregard from the environmental impact) and for the very nature of the certifications (e.g. External costs and monitoring the certification; internal cost to comply with the extra administrative requirements). Therefore, as such, certifications often do not provide enough incentives for all stakeholders to join and adhere to the standards, especially those stakeholders –often located in the producing countries - the most impacted by implementing the social and environmental indicators in the certification schemes. Additionally, in order to provide real economic incentives, voluntary efforts would also need to be supported by regulatory mechanisms both in producing countries and consuming countries to ensure implementation of commitments.
At the end of this report, the reader will find recommendations for Swiss NGOs to provide capacity building for artisanal and small-scale mining organizations through formalization, raising awareness in Switzerland to enhance consumer knowledge about the gold production system and the consequences it brings, as well as pushing for mandatory regulations for actors directly and indirectly involved in the Swiss gold supply chain. This report was written for SWISSAID Genève, therefore geared towards Swiss NGOs involved in the gold sector.