Investing in Gold – is it sustainable? 

Gold is an integral part of many investment portfolios yet it has until now come at a cost in social and environmental terms. Its extraction can destroy natural habitats and pollute water with toxic metals, while mines can displace communities and poison workers, whose working conditions are often deplorable. Mining for gold as for other precious metals is particularly energy intensive, and a single gold ring creates up to 20 tonnes of waste.

More sustainable alternatives are appearing, such as recycled and responsibly-sourced gold, but is that enough?

Recycled gold
The primary benefit of recycled gold is that it reduces further mining. Yet some see recycled gold as just a ‘greenwashing’ tactic to re-classify dirty gold as cleaner in origin. Moreover, it can be difficult to extract, as the amounts we consume in electronic goods like smartphones are minimal.

Unless gold loses its value, it will always be worth someone’s time to mine it – and recycled gold does little to make a substantial impact. This is where responsible mining comes in.

Responsibly-sourced gold
When mined in accordance to high Environmental. Social and Governance (ESG) standards, gold can provide fair employment opportunities, improved infrastructure and tax revenues with less of an impact. Labels such as Fair Trade Gold and Fairmined aim to ensure these high standards. However, the issue lies in that many of these standards are voluntary, or rely on accurate reporting on behalf of the mining companies. As with any sustainable universe, we must be wary of transparency masquerading as sustainability. It is a complex matter, but we need to see more responsible frameworks.

Worth its weight in gold?
Will ‘sustainable’ gold change the world? Probably not (yet), but the demand for this precious metal is only likely to rise with new technologies. If we are to believe that ethical or sustainable investing will become the new (gold) standard, we must encourage companies to take the right steps. This can be done through investment and engagement, but also needs government support and we must also be wary of new shiny green labels. We need more stringent regulations, a deeper understanding of the factors at play and not to be tempted by what may be fool’s gold.