1. business and industrial
2. business operations
3. management
4. supply chain management

A sustainable Management of the Gold and
Jewellery supply chain
Lugano, June 9 2015
Socially Responsible Procurement
Most people are now familiar with Corporate Social Responsibility (CSR) and the
concept of Sustainability:
the ability to fulfill the current, economic, social and environmental needs
without affecting the possibility for future generations to do the same;
Where CSR practices relate to procurement, we call this
“Socially Responsible Procurement” (SRP), or
the process through which organizations fulfill their
need of products, services and investments, assuring
value for the money spent throughout the entire
purchase life while generating benefits for the
community, the economy and the environment.
2
CSR in the Gold and Jewellery Sector
Social
Dimension
the organization
capacity of
engaging its
stakeholders and
their needs
Economic
Dimension
the business
ability to afford
its activity’s costs
and to grow
Environmental
Dimension
the management of
natural resources and of
environmental impacts
Even in the gold and precious
metals market, customers are
becoming ever more aware of
economic and social issues;
that is why it’s crucial that
values such as environmental
stewardship, human rights
respect and governance ethics
should be mirrored in the way
companies
operate,
and
Businesses should manage,
improve and communicate
not
only
financial
performances, but also their
social and environmental
impacts, relating to the
reference stakeholders.
3
Facts and Figures about gold and diamonds
Gold is mined in around 90
countries worldwide (including
Australia, Canada, the USA and
South Africa, China).
Artisanal and Small-Scale Mining
occurs in approximately 80
countries. There are approximately
100 million artisanal miners
globally.
•between 800.000 and 1,5 millions
artisanal miners in DRC
•between 350.000 and 650.000 in
Sierra Leone
• between 150.000 and 250.000 in
Ghana.
65% of worldwide diamonds comes from Africa.
4
Ethical risks within the gold and precious metals supply
chain
Child Labour
Health and Safety
Environmental Pollution
Artisanal Mines
Corruption and Lack of
Freedom
5
Ethical risks within the gold and precious metals supply
chain
•Deforestation
Lack of precious material traceability
•Child Labor exploitation
Sicurezza e salute
•Lack of health and safety on the work-place
(ground collapse)
•Slavery and lack of human right protection
•Lack of working rights
Lavoro minorile
GOLD
Large-scale
Mining
Refining
Product Manufacture
Trade
Small-scale
Mining
Smelting
Recycling
Step 1
Step 2
Lack of
precious
material
traceability
Step 3
Dangerous mixes of traced and nontraced precious material
•Pollution of water bearing strati and of surrounding areas
•Lack of safety (mercury in the environment and in the air
– mercury vapors)
Trade
Wholesale
Retail
•Lack of origin certification
•Poor transparency in the ethical and
social issues disclosed to customers
Step 4
•Corruption of the inspectors (governments,
institutions)
•Militias funding (conflict
zones) e mancanza
Corruzione
•Government bribery
•Irresponsible practices of the internationallibertà
gold and
diamonds wholesalers
6
Ethical risks within the gold and precious metals supply
•Deforestation
chain
•Child Labor exploitation
•Lack of health and safety on the work-place (ground
collapse)
•Slavery and lack of human right protection
Sicurezza e salute
•Lack of working rights
DIAMONDS
Large-scale
Mining
Trade of
raw
material
Small-scale
Mining
Lack of
precious
material
traceability
Trade of
polished
gemstones
Cut and
Polish
Product
Manufacture
Retail
Trade
Trade
•Lack of origin certification
•Poor transparency in the ethical and
social issues disclosed to customers
Laboratorygrown
diamonds
Step 1
Wholesale
Step 2
Step 3
Step 4
Corruzione e mancanza
libertà
•Corruption of the inspectors (governments, institutions)
•Militias funding (conflict zones)
•Government bribery
•Irresponsible practices of the international gold and diamonds
wholesalers
7
Countering risks with Corporate Social Responsibility
The CSR elements relevant to the stakeholders involved in the gold and jewellery supply chain:
Human Rights, slavery, bonded labour, child labour, freedom of association ,working conditions and wages,
exploitation and non-discrimination.
Environmental Responsibility, monitor the environmental impact of suppliers, and develop an environmental
purchasing policy that aims to reduce the environmental impact of their own and their suppliers’ activities,
goods and services
Equal Opportunities, addresses acts of discrimination on the basis of race, sex, religion, sexual orientation,
disability and age.
Diversity, initiatives that aim to increase the number of diversely controlled (e.g. ethnic-minority owned or
women-owned) businesses that supply goods and services to both public and private sector organizations.
Corporate Governance, strong and transparent reporting processes across supply networks and supplier
accountability for supplier performance.
Ethics and Ethical training, develop core principles of conduct, which can then be applied to employees and
suppliers worldwide – morally if not legally.
Biodiversity, protecting diversity concerning habitat, genetics and species and, as such, has an obvious impact
on SRP – particularly offshore suppliers in developing nations.
Community Involvement, Companies that engage and assist their communities become valuable members of
those communities and more respected by their stakeholder.
8
Countering risks with Corporate Social Responsibility
In order to avoid a contribution to human rights violation through supply chain affiliation,
a company may conduct the due diligence process to its supply partnerships, in order to
identify, prevent and mitigate actual and potential violation risks.
Once the suppliers have been analyzed, the next step is to determine how these suppliers
are going to be managed and communicated with as part of the SRP management
process. For example:
High-risk suppliers: Direct
dialogue involving a face-toface meeting would be
required with these
suppliers in order to engage
in dialogue.
Medium-risk suppliers:
These suppliers would need
to be actively engaged on
SRP issues. They could be
requested to demonstrate
their adherence to the Code
of Ethics.
Low-risk suppliers: Passive
communication of SRP
requirements only, via
standard terms and
conditions on purchase
orders.
9
Due Diligence and suppliers management
As far as the manufacturing of jewellery in gold, stones and precious metals is concerned,
following the due diligence process, a company should leverage their purchasing power
to promote a positive change along their own supply chain:
 direct actions (consulting, training
and awareness) perpetrated by
companies towards the suppliers
with whom they have built a stable
commercial relationship;

indirect
actions
defining
“responsibility clauses” embedded in
the contracts, including occasional
partnerships. Those indirect actions
are fundamental to guarantee the
respect and the pursuing of ethic
provisions.
provide
suppliers with
know-how
suitable for
human rights
stewardship;
Cooperation with
other companies
working with the
same supplier in
order to press
change forward;
partnerships with
other companies in
the same region and
with the local
government in order
to foster
improvements
10
Sustainable Supply Chain: International Initiatives
Numerous international initiatives can be leveraged by sustainable companies with the
objective of promoting sustainable development forms and industry competitiveness
RJC System: the monitoring of the social and environmental company risks
RJC’s Mission is to advance responsible ethical, social and
environmental practices, which respect human rights, throughout the
diamond and gold jewelry supply chain, from mine to retail.
The Certification states that the adhering organizations manage their
activities in a responsible manner. Since 2005 the RJC Members have
increased from 14 to over 250.
A certified Member has undergone independent, third party auditing
to show that their business practices at all facilities within the
Certification Scope conform to RJC’s Code of Practices for business
ethics, human rights, social and environmental performance.
For the Code of Practices, RJC certifies Members rather than each
separate facility, in order to encourage broader uptake of responsible
business practices across all relevant facilities within a company
11
Sustainable Supply Chain: International Initiatives
Due diligence in the mining and minerals sector – responsible management of metals
purchases in conflict or high risk areas
These Guidelines provide guidance for a global
responsible mineral supply chain management and
help companies to respect human rights and not to
contribute to conflicts in their supplying countries,
through their decision making and their mineral and
metal purchase practices.
The Due Diligence must be implemented by all
companies supplying minerals or metals from conflict
or high risk areas.
12
Sustainable Supply Chain: International Initiatives
Cyanide Management Code
A Voluntary program promoting a responsible management
of the cyanide employed in goldmines; it is aimed to improve
human health protection and to reduce the potential
environmental impact.
The Kimberley Process
Certification agreement granting that the proceeds of diamond
trade are not employed in civil wars funding.
In order to adhere, a country needs to verify that diamonds
produced in that country will not finance rebel groups or other
organizations, aiming to overthrow the government recognized by
the UN; that any exported diamond must show a certificate to
attest the respect of the Kimberley Process scheme; finally, that no
diamond will be imported from or exported to a non member
country of the Kimberley Process.
13
The benefits of a Sustainable Supply Chain
The final goal of the Socially Responsible Procurement process should be the
creation, protection and maximization of value for all the stakeholders involved in
the supply chain of gold and precious metals.
Thus, the ethical management of the supply chains becomes a critical activity by
itself since organizations delocalizing their operations in “low surveillance” realities,
will see an increase in reputational and image risk.
For the enterprises belonging to the gold and jewel industry
• identifying ethic, social and environmental risks in the supply chain
•design and implement a strategy to offset such risks
becomes a priority action. Thus, companies should verify the existence of potential
ethic, social and environmental risks associated with their business partners and, if
necessary, manage and neutralize them through actions arranged in concert (i.e.
information, awareness activities, ethic clauses in supply contracts and/or in
marketing contracts).
14
Thank you!
A sustainable Management of the Gold and Jewellery supply chain
[email protected]