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The Big Picture

Corporations are finding that not only is Corporate Social Responsibility good for the planet and its inhabitants, but for profits as well.

By Brian Bossetta

Brilliant Earth
What makes a gift of fine jewelry truly beautiful isn’t the sparkle of its diamonds or the weight of its gold — at least not in the eyes of Toby Pomeroy, a jewelry designer in Corvallis, Oregon. No, the true beauty lies in the story behind the piece of jewelry and, for this designer, that story is not just about romance, it’s about sustainability.
   To Pomeroy, Corporate Social Responsibility (CSR) isn’t some politically correct catchphrase to make consumers and businesses feel good about what they are buying and selling. It’s a “way of thinking” that puts ethics and respect — both for the artisanal miners who comb through the dirt searching for precious gems, as well as for the earth that produces them — at the top of the corporate pyramid.
   “For me, it’s about the big picture,” Pomeroy says. “I want to see a paradigm shift in awareness, in all industries, that focuses on business practices that will bring about a sustainable future.”

A Good Story
   A perfect illustration of that shift is the story of Coodmilla Ltd., a cooperative mine located in the town of La Llanada in the Andes Mountains in Narino, Colombia. The artisanal miners there, Pomeroy says, meet the standards set by the Alliance for Responsible Mining (ARM). With proceeds from the gold they mine, the 167-member cooperative funds projects such as water reclamation and provides retirement accounts, insurance and healthcare for the miners and their families.
   “It’s delightful to offer my customers gold that has that kind of a story,” Pomeroy says, adding that he can also provide his customers with peace of mind by ensuring them that the gold they are buying has been ethically sourced. “I can tell them the community the gold came from. I can actually introduce them to the miners who panned for it.”
   For Eric Grossberg, co-founder of Brilliant Earth, a jewelry design and retail company in San Francisco, social responsibility is the foundation of his business. “Brilliant Earth’s approach is that ethical concerns are, and always have been, at the center of our mission,” Grossberg says. “We didn’t set out to sell jewelry and then think about how we could do that responsibly. We were founded with the mission of selling ethically sourced, eco-friendly jewelry. And that’s still our purpose.”
   Tracing diamonds to their source to ensure they are not tainted with violence, human rights abuses or environmental degradation are the ingredients, Grossberg says, that create corporate responsibility. “In addition, we accomplish change by funding initiatives to help artisanal diamond mining communities recover from past abuses and take advantage of their diamond wealth.” Grossberg adds that such steps should, and could, be implemented by the jewelry industry today and “not at some distant point in the future.”

Who Cares?
   
Irresponsible mining and sourcing of minerals and gems through abusive means — child labor, poverty-level wages, government corruption — are paradoxical for the jewelry industry, Grossberg says, because those minerals and gems are supposed to be symbols of love and commitment. And while Grossberg says his customers care about these issues because “they care about their fellow human beings,” there’s more to it. “Artisanal gold mining is the leading cause of mercury pollution. It is partly because of this mining that some fish are becoming unsafe to eat,” he says.
   To avoid the potential hazards of mining, Todd Reed, a jewelry designer in Boulder, Colorado, uses only recycled goods in crafting his jewelry and has stepped away from mining altogether. “I don’t believe in mining. There are enough raw materials out there already,” Reed says. “Mining uses chemicals and takes up the land. By recycling, we don’t have to deal with the controversies associated with mining.”

Consumer Interest
   
Despite the global community’s efforts to stem the flow of “conflict” or “blood” diamonds into the supply chain through the Kimberley Process, there is still much violence and abuse associated with the sourcing of diamonds, according to Arvind Ganesan, director of the business and human rights division at Human Rights Watch, a nongovernmental organization (NGO) based in New York City.
   In countries like Sierra Leone and Zimbabwe, Ganesan says, governments and private security companies control some diamond-mining areas through force and have driven locals from their resource-rich lands. Corruption and poor governance in Papua New Guinea, Ganesan says, have prevented the locals from benefiting from the country’s enormous abundance of gold and other extractive reserves. In addition, he alleges human rights abuses — including gang rapes and torture — are being committed against local miners and demonstrators at the mining sites in the country by private mine security guards as well as by local police.
   “There is no regulation in place to stop diamonds and gold from these areas from hitting the marketplace,” Ganesan says. “Retailers must take it upon themselves to control their supply chain as much as possible.” And to that end, Ganesan sees a positive trend. “Companies, including high-end retailers, are becoming more diligent about their sourcing, which is a good thing.”

The Bright Side
   
One such company, London-based Gemfields, one of the world’s leading suppliers of colored gemstones, is at the forefront of ethical sourcing, according to Ian Harebottle, the company’s chief executive officer (CEO). “Not only do we comply with all the employment, environmental and community laws of the countries in which we are operating,” Harebottle says, “but we aim to go further than what the law requires.”
   Ganesan recognizes that there are positive stories related to the diamond trade — such as in Botswana, where diamonds have been an economic boon — and that the abuses associated with it are not universally rampant. “That is not to say that the diamond industry is littered with human rights abuses or that it’s a persistent problem everywhere,” he says. “But what is the case is that there are too many areas where abuses still exist.” Widespread poverty combined with unstable governments in regions of abundant natural resources present prime conditions for abuse, Ganesan adds.
   But the diamond industries in countries like Botswana, South Africa, Namibia and Angola are models of how the diamond trade can uplift local communities, according to Dr. Benjamin Chavis, senior strategic adviser at the Diamond Empowerment Fund (DEF), a nonprofit international organization in New York City that supports education initiatives in nations where diamonds are a natural resource. “The diamond industry in these countries has helped to improve the economy, build infrastructure, schools and hospitals,” says Chavis, who was encouraged by Nelson Mandela in 2006 to set up DEF to create awareness of the positive effects of the diamond industry, as well as to support and promote education initiatives in countries where diamonds are a natural resource.
   Government stability, Chavis agrees, is the foundation for progress but in the absence of stable governance, the private sector could step in. “Industry can be a catalyst for democracy and stability,” he says. “It’s in the interest of corporations to work with governments and it’s in the interest of governments to work with corporations.”
   During an April 2014 conference at the United Nations (UN) — hosted by the World Jewelry Federation (CIBJO) — focusing on the jewelry industry’s commitment to social responsibility, Melissa Powell, head of Strategy and Partnerships and Business for Peace at the UN Global Compact, highlighted the role of corporations in communities. “While we cannot ignore the fact that the private sector may at times have a negative impact upon the society,” Powell said, “it also has the capacity to bring about positive change.”
   Components of Gemfields’ social responsibility creed, Harebottle says, include paying competitive wages, encouraging a constant learning environment and fostering health and safety standards. He says Gemfields supports several primary schools and local clinics and has set up two farming cooperatives. Environmentally, he notes, the company ensures that harmful chemicals are not used in its mines and backfills its pits to promote proper drainage and revegetation.

Ethics Equals Profits
   
While ethical sourcing and planet-friendly practices might reflect a company’s conscience, they are also good for business. “Based on our own observations, we’ve seen rising demand for ethical jewelry among young people and with older customers too,” Grossberg says. “We’re trying to demonstrate that demand for responsible jewelry exists and that other jewelers could benefit by adopting similar responsible practices.”
   Donald Feaver and Benedict Sheehy, professors at the Graduate School of Business and Law at RMIT University in Melbourne who developed Branded Trust, an online system that allows companies to implement and track their social responsibility efforts, said during April’s CIBJO conference that properly applied Corporate Social Responsibility policies can result in a 2 percent gain in companies’ bottom lines.
   Harebottle also expresses his commitment in practical terms. “Our aim as an ethical mining company is to transcend the bottom line, but that doesn’t mean we’ve lost sight of the bottom line,” he says. “On the contrary, conducting our business as we do makes sound commercial sense.” Spreading this market-driven message, in Grossberg’s estimation, will create the necessary pressure for the mining industry to reform.

Marketing
   
If current marketing messages are any indication, then companies seem to be heading in the direction of “sustainability.” Gemfields, for instance, markets itself as “the world’s leading supplier of responsibly sourced gemstones.” The company also uses, Harebottle says, film and photography to illustrate its ethical mining and promote its CSR efforts. “Using an engaging medium to explain, in clear simple language, how your operation works instills greater understanding, and therefore confidence, in the consumer,” he says.

 
Gemfields by Art Creations
   At Brilliant Earth, corporate responsibility is not a “side project” in the company’s marketing, Grossberg says. “When customers shop for a diamond at Brilliant Earth, our jewelry specialist can answer their questions about our sourcing. And when customers go online to our diamond database, they’ll see an origin for each of our diamonds.”

Mother Earth
   
However companies market their sustainability efforts, or whether or not they take on the mantle of corporate responsibility in the first place, Pomeroy believes it’s a matter of paying now or paying later. “If we don’t do what’s right today, it might not affect the immediate bottom line but we’re going to have to pay for the negative impacts of irresponsibility in the future,” he says. “We must take a broader view. Viewing our lives and businesses as separate from the rest of the world is a colossal mistake.”

Article from the Rapaport Magazine - June 2014. To subscribe click here.

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