The Earth is said to have a capital of gold estimated by the World Gold Council at 244,000 tons of gold, of which 187,000 tons have already been mined. The ⅔ have been mined for the past 70 years! According to the US Geological Survey, therefore, only 57,000 tonnes of gold remain to be mined. So, you will say to me, why continue to extract from the ground when we know the thousands of tons of gold which circulate today in the world through our technological objects, industry, granny’s watchmaking which has not emerged from the coffers of the Bank since 1980, in short, what if gold also became an asset in the circular economy? All the more so if you take a closer look at the energy consumption required for the extraction of the precious metal, it is not very eco-friendly. Already, during the Paris Agreements, all industries were called on to reduce their dependence on energy derived from fossil fuels. The gold industry, which is particularly polluting and disrespectful (in some cases) of human rights, is no exception. So, 5 years after COP 21 and at the very moment when more and more citizens and investors are developing an ethical and responsible conscience, is gold on the way to becoming an asset in the energy transition and circular economy? Zoom in on new trends to think ethical gold and respect the environment, and the companies that make these principles the basis of their business.
Warning : This article is brought to you by the company Veracash. Crypto investments are risky by nature, do your own research and invest only within the limits of your financial capacity. This article does not constitute an investment invitation.
The climate emergency, a global imperative that also affects the gold industry
Some of you have undoubtedly followed it in its time, the COP21 brought together in Paris, in 2015, 195 countries and resulted in the signing of the famous Paris Agreement. A virtual summit was also held last Saturday in an attempt to give a boost to global climate ambitions. At the time, the vast majority of leaders around the world agreed on the ambition to mitigate the potentially catastrophic effects of climate change, calling on the world economy to reduce its CO2 emissions to zero by 2050. To achieve this, all industries needed to quickly reduce their dependence on energy derived from fossil fuels. Climate-conscious investment groups have particularly insisted that all sectors clarify their detailed plans in order to contribute to emissions reductions and climate stability. As an industrial sector of choice and a heavy energy consumer, gold has not escaped it. The World Gold Council has previously identified that 99% of the gold sector’s greenhouse gas (GHG) emissions are linked to gold mining operations and then the question arises of the sector’s capacity to produce differently and to think of more responsible alternatives such as recycling, or the alternative to the use of electricity and fuels …
To meet a climate target of limiting global warming to “well below 20 ° C”, industry would need to reduce its GHG emissions by 80% by 2050.
In a new WGC analysis, carried out in collaboration with energy and mining specialists from Wood Mackenzie, researchers analyzed the path to decarbonization of energy, and how this could enable the gold mining sector to reduce its emissions on a sufficient scale and speed. Recognizing that action is needed over the next decade to make net zero carbon targets achievable, the report assesses the impacts of reducing emissions from gold mining against the 27 reduction targets. % and 46% of emissions by 2030, which would put the sector roughly on schedule to meet compliant targets of less than 20 ° C and 1.50 ° C, respectively, by 2050.
But, beyond the climate emergency, Gold mining also raises questions about issues of health, safety and respect for human rights. This is why many ethical and responsible sectors are developing around the world, at the same time as the gold mining activity has drastically declined over the past ten years.
Gold’s carbon footprint
Since 2018, the World Gold Council has carried out substantive work on the links between gold and climate change. The opportunity to comb through the GHG footprint of the various mines and study the alternatives in order to achieve a neutral carbon footprint. In particular, it should be noted an improvement since the emergence of new generation mines which invent new processes in order to drastically reduce the energy consumption of gold mines.
In 2019, the WGC notably published a guide of principles for gold mining, addressed to the entire gold chain: consumers, investors, governments, the supply chain, in order to align with the UN Sustainable Development Goals.
Beyond the purely ecological aspect of the initiative, it is the entire gold industry that seeks to empower its action and its footprint.
And this awareness does not only concern the production of gold and its consumption, especially in the jewelry sector, but above all investors.
Indeed, anxious to contribute to a “positive improvement” of the world. Now, investment decisions are increasingly determined by environmental, social and governance (ESG) factors.
The ESG revolution has become mainstream. In this context, gold can no longer escape its new green destiny which hangs in its face.
Let’s not go so far as to say that investors only look at the philanthropy of their investment, but let’s say that in line with green bonds, they are increasingly seeking to invest sustainably in profitable and environmentally friendly vehicles.
In summary, the report published by the WGC details the main lessons:
- Downstream uses of gold – bullion, jewelry, and electronics – have little material impact on the overall carbon footprint gold or on GHG emissions.
- The current main source of GHG emissions in the gold supply chain is the use of energy and fuel in the production of gold mines.
Increased market volatility and uncertainty about climate risks are expected to support demand for gold investment, given that the roles of gold as a risk hedge, portfolio diversification and market insurance asset are well established.
In short, these results suggest that gold may have an additional role to play as a climate risk mitigation asset in long-term investment strategies.
In conclusion, to achieve carbon neutrality in gold production in 2050, the WGC suggests three avenues to reduce the main GHG emissions in gold production (diagram above):
- Improve processes and energy efficiency
- Decarbonize electricity
- Decarbonize vehicles
- Operate on autonomous energy and mini-grids
- Decarbonize other sectors of the economy to reduce the consumption of chemical processes
Gold, at a crossroads, therefore has real challenges ahead of it in order to transform society’s and investors’ perception of its industry, which is known to be very (even too) a consumer. So how do you reconcile precious metals and a green deal?
The gold and precious metals sector 2.0: the new green deal?
To ensure sustainable and responsible production, the main market players have thus developed a series of initiatives and standards to give stakeholders, consumers and investors greater confidence in the provenance of gold as a product. or else original. And, of course, it all starts at mine.
To guide and support this progress, the World Gold Council recently launched the Principles for Responsible Gold Mining (RGMP), a comprehensive framework in which gold mining companies can position themselves on a wide range of material ESG factors.
Investors are increasingly turning to assets that respect the UN’s sustainable development goals. And gold does well to take a closer look at all of these rules, given the enthusiasm that is being put on it.
Overall, gold’s carbon footprint is relatively small, estimated at less than 0.3% of global annual consumption of greenhouse gas (GHG) emissions. The vast majority of these emissions are generated by the mining and crushing of gold and, in particular, by the electricity and fuels used to power these processes.
Globally, as announced in the latest WGC report, meeting carbon neutrality targets will require $ 1 trillion to be invested in metals over 15 years, twice as much as usual. So, how can gold and precious metals become energy transition assets?
Contrary to popular belief, precious metals also play a crucial role in the production, transmission, or storage of low-carbon or non-carbon energy.
” The energy transition begins and ends with metals “
Julian Kettle, vice president of metals and mining at WoodMackenzie.
Certain precious metals are essential for the entire energy sector. For example, silver is an essential component in the manufacture of solar panels. Thus, more than 12% of world demand is now dedicated to gray metal. Moreover, platinum and palladium, which we presented to you in a previous article, are becoming essential for “clean” mobility, that is, electric mobility.
Investing in gold and precious metals today is both a guarantee of confidence and stability, but also undoubtedly a high return if one thinks of their use in the context of new shift in the energy transition, and all the more so if it becomes a neutral asset that respects the environment.
Ethical, recycled, responsible: gold paved with good intentions
As you know, jewelry is one of the most gold-consuming sectors, and it must be said that fashion is for ethical and responsible consumption. More and more suppliers are specializing in this and labels are being created to promote a new way of consuming and investing in it.One of the most profitable assets today. So, in 2018, Chopard had already committed to using a 100% ethical sourcing of gold for its jewelry and watches. Kering followed up with a commitment to use 100% recycled gold by 2020.
The notion of ethical gold has appeared since 2005, at the initiative of the Alliance for Responsible Mining (ARM), notably present in Peru, Bolivia, Colombia and Ecuador. Extracted in an artisanal way, here is the definition of ethical gold, it makes it possible to respect both the rules of the World Labor Organization, all too often flouted in many mines, particularly in Guyana or Brazil, but also to meet the sustainable development objectives that we have described above, all of this. in support of the local economy. Finally, the issue of traceability is a real issue at the root of many questions that need to be
Among the many labels, we find “Fairmined”Issued by a Colombian NGO and whose mode of operation is described below:
But there is also Fairtrade, launched by the Swiss Max Havelaar Foundation. This label imposes requirements not only on gold mining but also on the value creation chain which involves the entire chain from producer to consumer. In addition, jewelers, concerned with traceability, use recycled gold and actors certified by the “RJC” organization (Responsible Jewelery Council), which develops a benchmark standard for the entire supply chain. In terms of price, it is true that recycled Fairmined or Fairtrade gold is slightly more expensive by 10 to 15% but does not generate additional costs and above all has already lived a first life. Even more original, the Courbet firm that we know well at Thecointribune since we went to the inauguration of the use of the futuristic crypto payment terminal at Lunu place Vendôme in Paris, in the premises of Courbet. The jeweler has in fact chosen to use only the precious metal resulting from the recycling of electronic or industrial waste. So beyond even ethics, Maison Courbet claims to be ecological:
“In a mine, a ton of earth can hold 5 grams of gold, while a ton of electronic waste can generate 200 grams.” “And then customers are also increasingly demanding an ecological approach, they are aware of their daily impact and are already thinking about the origin of the clothes they wear”
Marie-Ann Wachtmeister, artistic director and jeweler designer of Courbet
ATBeyond these labels, we can also imagine the added value that a blockchain could bring to certify the origin of gold and ensure that it ticks all the boxes of ethical and responsible principles, a pillar of economic development of the majority of companies.
But beyond this responsible use by jewelers, is the same true for stock market gold and the gold in which we invest?
The Veracash solution: an ethical and modern neobank to propel gold into a new dimension
At the risk of creating controversy in the ranks of crypto addicts, Veracash did a little math in 2017 showing how much less energy recycling gold consumed than creating Bitcoin. All else being equal, recycled gold does appear to be an environmentally sustainable currency.
Beyond these considerations, Veracash, and before it its parent company Aucoffre.com have always bet on ethical and responsible gold. So, by enabling the transmutation of gold, Veracash offers members to transform the gold lying dormant in their cupboards into Veracash.
The principle is simple, VeraCash allows you to credit your VeraCash account by reselling your gold, whether it is damaged or not: jewelry, ingots, coins or debris, VeraCash turns your property into HRV.
In addition to transmutation, all of Jean-François Faure’s companies have chosen to use only recycled gold. In the Aucoffre.com familya Vera Valor ¼ oz holds gold that is certified by the LBMA and 80% recycled. In VeraOne, the company’s crypto version, over 90% of the gold is recycled. Moreover, as we told you in a previous article, From January 2021, Swiss gold refiners will have to indicate whether the imported gold comes from mining, banking or recycling. In short, at Veracash too, the ethical and responsible issue is not just a buzzword, it is a key principle of the business model.
Moreover, this is a fairly clear direction in the communication of the neobank:
“VeraCash® gold aims to give back meaning to money, and to give a modern image to gold” “VeraCash® is a currency as flexible as Bitcoin and as stable as gold bars”
Thus, the HRV is a digital and hybrid currency:
- Flexible like a cryptocurrency : a very fast transaction thanks to the “Send HRVs” function;
- Stable like gold bars : benefiting from all the advantages of the yellow metal which guarantees security, tangibility and preciousness;
- Eco-responsible as a complementary currency : both by the recycled gold but also the fact that no mining action is necessary to send HRVs
If gold has often been praised to be an energy consuming asset, it is also taking the green turn to rank among the best, fully respecting the UN SDGs and seeking alternatives in order to become ethical. , responsible and sustainable. Faced with the crisis that our societies are going through, these fortunate assets should not go unnoticed, in addition to a unmatched cost efficiency and safety. If you want to know more about precious metals, go every week to the platform for alternative investment !
Karen is passionate about new technologies in general, and blockchain in particular! Uncovering trendy news, the latest market developments, and the treasures of the ecosystem, she is happy to help you discover this universe in all its colors.