Certification Under Swarna Adarsh Abhiyan Could Begin By End Of 2023: Mike Oswin

Mike Oswin, Global Head, Market Structure And Innovation, World Gold Council (WGC), speaks to Solitaire about the gold marketing body’s ongoing efforts to promote the Retail Gold Investment Principles (RGIPs) across the world’s major gold markets, including India. He informs that once the self-regulatory organisation under the Swarna Adarsh Abhiyan (SAA) is created either by end of this year or early next year, then independent certification against an auditable framework could begin by the end of 2023.

Mike Oswin

What prompted the World Gold Council to develop the RGIPs?

There were three main drivers that led us to create the Retail Gold Investment (RGI) Initiative.

We conducted a global consumer retailing insight survey in 2018 and 2019 that covered seven countries and involved 18,000 active retail investors who invest in securities, funds, etc., and asked them their opinion on gold.

The survey revealed that there was a real demand for gold that wasn’t being realised. Of the 18,000 investors we spoke to, some 83% said they were actively considering a gold investment at that point in time. And of those 83%, close to 50% said it will be their first investment in gold. These were new investors wanting to buy gold, but they weren’t. So, we asked them why not? And the barriers that they cited to us were trust in the product, trust in the market, and trust in the experience – probably because of the diversity of the gold market compared to buying an equity.

This gave us a good indication that we needed to solve the lack of the trust and increase the understanding. That was the primary driver to start the initiative.

For retail gold investment there aren’t any best practices. It’s the good dealers, it’s the good actors instilling trust in their business and their product for their clients. But there’s nothing that they can point to as a common framework and that’s what we wanted to create … a common alignment so there’s a very clear understanding for retail investors, looking at this market for the first time, what they see and how the market works.

If we were going to start engaging the market, we realised we needed a framework. So that’s why we drafted the Principles. The World Gold Council is initiating it, funding it, and supporting it, but we really want industry to adopt this and own it.

To draft the seven Principles we consulted over 50 of the world’s major dealers across 16 countries. They worked with us to review the drafts, and after many iterations, we got the principles as right as we could, before we then took them out to the market. So that’s where we’ve got to on the RGIPs.

How is the World Gold Council going to ensure that these principles are being adhered to?

That’s a good question. Principles are good, but they’re very broad. At the World Gold Council, we’ll always own that document, but what we need to do is translate that document not just from a language perspective, but also from a market structure perspective. For instance, how would we take those principles and operationalise them? How would we make them right for the Indian market, the German market, the US or the UK market, etc.? And how do we reach the point where the industry can own them, but the industry can then be audited against them? Because that’s the key answer to your question. You can’t audit the Principle, but you can be certified against an audit scheme.

The first step therefore is to translate the Principles into a code of conduct that is fit for the market that we’re in. Then, we can work with auditing companies, who can help us translate that into an auditable framework. And then you’re certified against the audit by an independent body stating that you are in adherence to the code of conduct and the scheme, which, in turn, maps back to the Principles.

These certification schemes will not be owned by WGC, but independently owned by the industry, but will always be able to show the relationship back to the Principles. So whatever market you’re in whatever your operation operationalisation scheme looks like, you’ll still be able to say this is all part of the global RGIPs.

Is there a plan to develop the RGIPs as a type of Certification for trade members?

Absolutely! Certification is a must. And self-assessment is really important. And while the World Gold Council will always maintain the RGIPs, the certification model will be independent and owned by the industry. WGC will not become the certifier, we will not award trust marks or anything like that. But industry can gather together.

What are the benefits of RGIPs especially for the Indian jewellery manufacturing and retailing segments?

The absolute benefit comes back to the investors who want to buy gold, but they’re not. So, by increasing that trust and understanding by the Indian jewellers coming together and becoming members of the self-regulatory organisation (SRO) or Swarna Adarsh Abhiyaan (SAA), which is the name of the initiative here in India, they are able to tell investors or consumers that they are adhering to these best practices so they can be trusted.

And therefore, when we’re educating new investors or consumers of jewellery in India, you’re able to see that common framework. So all of the jewellers that are adhering to the SAA campaign and the code of conduct, it’s an embedded trust.

We would expect to see an uplift, and we’d expect to see more demand, we’d expect to see some of this demand which is not being realised. For jewellers, we’d hope to see the pie grow. And then as the pie grows, then obviously that benefits the entire market.

What are the challenges that you faced in India when trying to implement the RGIPs?

If I can speak broadly for the whole campaign. One challenge is getting the message to the dealer. It’s about having the gold dealers and the jewellers understand the benefits of this initiative for them.

Firstly, that this isn’t something that’s going to create more work for them, or create problems for them. There is no cost to this at all from the WGC perspective. Clearly, when there is independent certification, there’ll be audits to be done, but there’s huge benefits of those.

We’re not going to police the market at all. But it’s the trustable dealers that must come together to create the framework, that then makes it a lot more difficult for the more black market end to operate.

Did the implementation of mandatory hallmarking in India have any bearing on the adoption of RGIPs here?

I would say the mandatory hallmarking is an absolute great achievement for the Indian market. That is going to bring again different elements of trust at the product level. So, a great step forward for the Indian market.

When the SAA the code of conduct created on the RGIPs gets to certification, the hallmarking element will be a segment that certification can draw on as part of validating the dealer.

So, what you’ll be able to do is leverage the hallmarking as an external scheme and bring that into the audit framework. It’s going to be hugely beneficial to the RGIPs.

What efforts has the World Gold Council taken to promote the RGIPs in India? And what is the general response received from the Indian market?

From a WGC perspective, when we started this, and when we start talking with each market, we want to get to the last mile as best as we can. We want the RGIPs to work for everybody. So clearly, there’s a top end of the market, there’s a middle tier, and there’s a lower tier. And that’s the same in every region. And we want to find ways that we can ensure that we get the message to everybody.

We’re doing here roadshows in 25 cities. Yesterday was one of the shows where we participated with GJEPC to create awareness about Swarna Adarsh Abhiyan why it is required, and we will also be doing trade market advertising in some of the trade publications, a campaign to create more awareness, encouraging people to come and visit the website, read about the principles, understand why it’s important, participating in most of the top industry events whether it is the IIJS, India Gold Conference and so on. And the response has been fantastic! We already have people signing up, expressing their interest to be part of this particular movement.

What is the progress of RGIPs in other key global markets?

We’re getting very good traction in Germany, great support in the United States and Canada, in the United Kingdom we’ve been working with all of the dealers again, getting very, very good feedback. Singapore is a very interesting market because you have a very good legal framework that underpins the precious metal dealers. And so, we’re able to also talk with the development agencies in Singapore as to what we can do. And also with Singapore, it will act as a very good springboard for us into markets like Thailand, Indonesia and Vietnam.

We’re having conversations in Italy and Mexico. And we will bring other regions into the program of work.

In India, how far are we from the certification stage and code of conduct, etc.?

Timewise, the ambition is to have the self-regulatory organisation created in its early forms by end of this year or early next year. If we can have the SRO established in the given timeframe, and then work through what the certification would be, we could begin to see certification probably by end of next year.

When you conducted the survey, was the provenance of gold something that consumers cared about? For example, did they want to know which mine the gold has come from?

No, they generally never go to the level of wanting to know the mine the gold has come from. But it’s fair to say that investors now absolutely want to know that the gold is responsibly sourced, I think that is very important today and is going to become absolutely more and more important going forward.

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