Chains of Responsibility in the Jewelry Industry

Chains of Responsibility in the Jewelry Industry

In an interesting development on supply chain management, 14 companies in the gold and jewelry business have together launched the Council for Responsible Jewelry Practices. The founder members cover the entirety of the gold and jewelry production process, from the mine to the showroom, and include Rio Tinto and Newmont at the former end and Cartier and Tiffany at the latter.

The CRJP gives its objective as being to "promote responsible ethical, social and environmental practices throughout the diamond and gold jewelry supply chain, from mine to retail." Although founded only in May, the organization has already fleshed out some clear aims. Principal among these is the development of a "Responsible Practices Framework," in consultation with key stakeholder groups that will define the ethical, social and environmental standards to which all members will commit to conduct their businesses. The CRJP also commits itself to an implementation process that will include self-assessments, as well as a system of independent third-party monitoring.

However, the CRJP sees itself as having a wider role, acting as an advocate for business responsibility within the industry and developing initiatives to address ethical, social and environmental challenges through publicly and privately financed projects.

The CRJP makes it clear that it has been established to "reinforce confidence in the diamond and gold supply chain." A similar sentiment lay behind the establishment of the Kimberley Process in 2000. At that time, companies at the retail end of the diamond business -- de Beers in particular -- realized the threat to their trade posed by so-called “blood diamonds.” Gem diamonds have no intrinsic value: their huge price is dictated instead by their image. If associations with war and mutilation were allowed to tarnish that image, then diamonds risked becoming as unacceptable as fur coats.

Criticism of Kimberley Process

The foundation of the CRJP coincides with a Global Witness report criticizing the Kimberley Process. Like the Save the Children report on the Extractive Industries Transparency Initiative three months ago, the report, “Implementing the Kimberley Process,” is intended as a critical review of the process. It continues the trend of campaigners seeing themselves as having a role in developing solutions to corporate responsibility challenges.

The report praises the progress made by the Kimberley Process to date. In particular, it draws out two developments. First is the expulsion from the process of The Republic of Congo because it was “found to be non-compliant with the Kimberley Process.” The second is the establishment of a working group to focus on the problems of implementing systems of control in countries producing alluvial diamonds.

However, the report also makes a number of recommendations about “problems that must be addressed to ensure the credibility and effectiveness of the Kimberley Process.” The first criticism is of the statistical collection and analysis, which is meant to be one of the “key tools” for detecting conflict diamond trading. Eleven countries are cited as having submitted incomplete data so far. Second, the report calls for the monitoring processes to be improved so that the systems in place in member countries for tracing diamonds are known to be robust. Eight countries are cited as not having had their internal systems inspected by external monitors.

The third recommendation is also concerned with the objectivity of monitoring processes, with a proposal that the process appoint an independent evaluation team “to conduct a credible, effective and transparent review.” Finally, Global Witness calls for a better process for sharing experience and providing technical support, and capacity building to countries that need assistance.

It is perhaps not surprising that the issues raised by Global Witness in relation to the Kimberley Process should be so similar to those raised by Save the Children regarding the EITI -- in essence, how to verify that what is supposed to happen actually does happen. Obviously the cynics would claim that initiatives like these are merely developments on corporate PR spin, and that the reason that verification is difficult is because the companies do not actually want the process to work.

However, the members of the CRJP would argue that companies do want these processes to work -- the problems with them are practical. The supply chains for extractive goods, for gold and for diamonds, are all long, complex and, in many cases, hard to discern. It is encouraging that campaigners such as Save the Children and Global Witness recognize this and are prepared to provide intelligent critiques of initiatives like the EITI and the Kimberley Process. Answers are not easy to find, but they will be found more quickly if different groups are prepared to work together.

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Peter Davis is politics editor of Ethical Corporation. He is also director of The Navigator, which provides specialist advice on social and political risk.

This column has been reprinted courtesy of
Ethical Corporation. It was first published on Aug. 30, 2005.
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