Imperatives for Building a Responsible & Resilient Precious Metal Supply Chain
Any non-financial risk associated with human rights, environment or ethics and integrity can be that bad apple that has the potential of rotting the good basket of apples that you may have collected over the years. The reputation that you build, goodwill that you create and the social license to operate that you acquire after years of hard work can come crashing down because you did not pay attention to one single non-financial risk in your supply chain. We tend to overlook these risks as trivial or even don’t know about them.
Transparency & Accountability
OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and its 5-step risk-based framework for upstream and downstream supply chains clearly underlines these non-financial risks that can impact your business and what can be done to identify, assess and mitigate these risks. It is imperative for businesses in the precious metal sector to adopt this framework to build responsible and resilient supply chains to survive in this fast-changing business environment. Stakeholders want to know, your business is under constant scrutiny, and they want you to be transparent and accountable.
Setting & Upholding Policies
Putting the right policies and procedures in place is the first step you should take to address the non-financial risks, complementing it with by setting up a robust compliance function. Investing in a well-staffed compliance department that include CSR and ESG consultants, keeps you secure and helps you save money. It is like any life or health insurance; you only understand its importance in the event of an exigency. If policies have to be implemented, procedures need to be followed and risks have to be identified and mitigated, you need a compliance team. If preventive and corrective actions have to be taken, you still need them.
Once the initial risk assessment has been completed and the identified risks have been mitigated, you need continuous monitoring. Do not get complacent. The risk of one rotten apple is always there. You can find the rotten apple when you are brave enough to undertake risk identification of your upstream suppliers. Go right up to the source. When continuous monitoring is complemented by training and capacity building, it creates a culture of compliance. It enables your compliance function to mature and helps you realise the larger goal of sustainability.
The next step should be to proactively engage with independent third-party auditors. Do not wait for them to be sent by other interested parties. They are essential for your growth and improvement. They help you see things that you may have missed. They identify the process gaps that you need to address to further strengthen your management systems and compliance function. Always consider them to be part of your team with an independent perspective. Respect their independence, never try to influence them, and let them call a spade a spade. Always be open to learn from them, this is how you will improve.
If you have come this far, then the best practice is to report on your performance publicly. This is also the fifth step the OECD RBDD framework talks about. Why not report? You have done all the hard work. Reporting is like adding the finishing touches to a painting, it enhances it, completes it. If you want to be seen as a responsible business, you need to share your performance on non-financial aspects.
Building responsible and resilient precious metal supply chains is in your hand. Take one step at a time. Use the OECD Guidance as a ready referral. Invest in your compliance function. Build the capacity and capability of your team through training. Engage with independent third-party external auditors proactively and learn from them. Consider them to be a part of your team. Do not be afraid to know. Go up to the source to find the one rotten apple. The ASM sector can be the most vulnerable. Do not disengage with them, rather engage with the ASM sector and the various supply chain actors, and help them improve. You will be changing many lives. Consider this to be your biggest opportunity to do good.