Molten gold being poured

Verité’s report on risks of forced labor in artisanal and small scale mining (ASM) in Peru raises challenging questions for companies in industries including jewelry, mining, electronics and banking. Not only does the report show that these risks are very real, but it reveals that ASM gold tainted by human rights abuses makes its way—through corruption, laundering and illegal export—into the hands of global traders, refineries, banks and into our watches and smart phones. So what should companies do to mitigate this risk? What can jewelers, bankers and electronics brands do to ensure that the gold they buy is free from modern-day slavery?

There is no easy solution to this problem. But there are a number of important steps that companies can take to play their part in the solution.

First, start with your own sourcing practices. Buy responsibly. Source directly from mines or cooperatives with demonstrated compliance to labor laws rather than through intermediaries, refineries or exporters. Consider sourcing fairtrade and fairmined gold too. Look to organizations like Solidaridad and the Alliance for Responsible Mining to identify ethical producers and help create greater demand for “better gold.”

Consider your own compliance regime as well. Are your assessments and corporate responsibility systems robust enough to identify problems at the base of the supply chain? Most companies—answering truthfully—will say “no” (though probably not publicly). At best, they have visibility over their own operations and maybe those of their direct suppliers. But that’s not enough. As Verité’s report shows, problems can occur—and, indeed, are more likely to occur—well before gold is exported and reaches the hands of traders or refineries. Corporate compliance programs must tackle this weakness head-on, or they risk buying metals produced by modern-day slaves.

Don’t “go it alone.” Companies should work with others to solve this problem. In fact, that is the only way a problem as complex as forced labor in ASM is going to be solved: through concerted multi-stakeholder engagement. Work with peer companies to test solutions. Engage with trade unions and NGOs in partnership and dialogue. Join an industry-based or multi-stakeholder initiative like the Responsible Jewelry Council. Companies can learn, build internal capacity and even save money working with peers and other stakeholders. They can also develop more effective solutions to the supply chain risks they share.

Consider the role you can play in progressive policy advocacy at home, in countries of operation and in other supply chain locations. This is a key but often neglected piece of the puzzle. Forced labor in illegal mining or at the margins of the formal economy (sometimes hidden or even linked to criminal gangs) cannot be solved without the political will, financing and institutional engagement of committed governments, across jurisdictions. Extending regulation and investment in law enforcement are both essential. So is adequate financing and capacity building for labor inspectors, who often face remote and dangerous working conditions themselves. Companies should support—and not weaken or undermine—such investment. In priority jurisdictions, cooperate with representative trade or employers’ organizations to promote regulatory environments that contribute to the fight against forced labor.

Finally, as noted, gold from illegal or artisanal mines—where risks of forced labor and trafficking are more significant—can be laundered, mixed with gold from legal sources and then exported. This presents a serious challenge to traditional compliance strategies and social auditing.

To address this, consider alternative strategies of “tracking” or “tracing” the gold you buy from mine to refinery, drawing on emerging good practice in combating conflict minerals. Shine a light on your supply chain, establish new, robust procedures (for example, as part of a multi-stakeholder initiative), pilot those procedures and share the lessons learned to advance collective knowledge. Consider joining existing programs like the Conflict-Free Sourcing Initiative implemented by the Electronic Industry Citizenship Coalition.

While tackling forced labor in ASM does not have easy answers, there is no shortage of steps companies can take to be part of the solution. Some of these steps are presented here. More can be found in the practical tools and guidance in Verité’s Fair Hiring Toolkit.

For more information about Verité’s programs and activities, contact Philip Hunter.