The diamond and jewelry trade isn’t doing enough to curb ethical abuses in its supply chain. That was the upshot of a February report by NGO Human Rights Watch (HRW), which analyzed the standards of 13 retail jewelers worldwide and assessed the governance and certification systems of the industry-led, 1,000-plus-member Responsible Jewellery Council (RJC).
The findings were not particularly flattering. While the report — titled “The Hidden Cost of Jewelry: Human Rights in Supply Chains and the Responsibility of Jewelry Companies” — acknowledged that some companies were working hard to address risk factors in those areas, it expressed concerns that other businesses relied solely on supplier assurances “without rigorously verifying these claims.” Still others, it said, had made no commitments toward ethical sourcing at all. It concluded with recommendations on how to improve protocols for ethical compliance.
Of particular concern to the industry was the report’s criticism of the RJC. Although it noted that the jewelry body’s standards were being reevaluated, HRW described the current system as “flawed.” Considering how much of the trade relies on the RJC to set its ethical blueprint, that was a troubling statement for many jewelers.
A wake-up call for retailers
The industry response has ranged from measured to defensive. While some companies have taken the report as a confirmation of their current trajectory, others were chagrined at the HRW — an industry outsider — critiquing as inadequate many of the standards the trade has worked so long to establish.
For retailers, however, the report has primarily been a wake-up call.
“[This report] serves as a warning and a notice and a push in the right direction in terms of making sure that as an industry, we shore up all the potential pitfalls that could hit us at any point,” declares Jevan Fox, vice president of Bixler’s — a multi-tiered operation with dozens of stores in North America, including Perrywinkle’s and a number of Pandora franchises. “This is such an important time, because our industry is changing so drastically in terms of how consumers make their purchasing decisions. [Today’s] customers need to know that when they purchase something, inherent sourcing values are part and parcel of that purchase.”
Industry leaders are also aware of how reports such as this one could affect consumer confidence. “I think a lot of brands and retailers are taking this report seriously,” says David Bonaparte, president and CEO of trade body Jewelers of America (JA), who attended the HRW meeting in Washington on the report. “I think it’s very important, because people want to feel good about what they’re buying. I don’t have a sense of how many consumers are actually asking about this, but we like to stay ahead of the game and assume that it’s going to happen. If consumer confidence goes away, then the business goes away.”
And it’s not just the retailers HRW profiled that can take a lesson from the study’s findings.
“A report such as this should have a positive impact on all retailers and brands,” says David Bouffard, vice president of corporate affairs at Signet Jewelers, which has over 3,500 stores and owns Kay Jewelers, Zales and a variety of other companies. “For those covered in the report, it should serve as an opportunity to review existing responsible business practices and reaffirm areas of strength, while also identifying areas for improvement. For those not included in the report, it should serve in a similar vein, as a lever [for] continuing — or for some, an opportunity to begin — to address areas that are important in meeting the expectations of customers.”
Listening to the buyer
Indeed, ethical considerations are top of mind for many of Fox’s clients, even when they’re not explicitly saying so. The Bixler’s vice president points specifically to “the new buying group” of millennials, who he says are more driven by sourcing considerations than were previous generations. “Whether they call it out in-store or on social media, we know this is part of their purchasing decision.”
Bouffard agrees; Signet’s own research has shown responsible sourcing to be “extremely important” in meeting customers’ demands, he says. “It should not surprise anyone that consumers are indeed aware, and that they expect us to source our products in a responsible manner.”
For its part, HRW did all it could to push the report’s findings on its social media platforms, especially on Twitter, where the organization has over 3.6 million followers. The report became the keystone of HRW’s Twitter presence in the months following its release.
“Within the first week, our #BehindTheBling hashtag had been used nearly 20,000 times,” says Jo Becker, advocacy director at HRW’s children’s rights division, who co-wrote the report with the division’s associate director, Juliane Kippenberg. In addition, more than 8,000 people wrote to each of the 13 companies the study featured, according to Becker, and the group’s press release on the report “has been viewed thousands of times” online.
The organization’s extensive outreach tapped into customer concerns about ethics. Businesses that choose to ignore those concerns do so at their own risk, Bouffard cautions. “This is not to say all brands must be promoted as responsibly sourced,” he says. For instance, a brand may not specifically mention the ethical angle in its marketing, even if it knows — through “auditable substantiation” — that the materials have reputable origins.
Unfair criticism?
This is not the industry’s first brush with the sourcing controversy.
“Our industry has been subject to increased scrutiny for many more years than other industries because of the nature of the products,” says Tiffany Stevens, president and CEO of the Jewelers Vigilance Committee (JVC). “Most of [the products] come from the ground, and it’s easier to immediately see the impact. But because of that longer-term scrutiny, the industry has developed methods around production at all levels to not only decrease harm, but to develop philanthropy and programs in regions that are part of the supply chain.”
Those social programs and philanthropic efforts did not go unnoticed in the HRW report; however, it dismissed most of them as largely unrelated to the ethical-sourcing dilemmas in question. That censure stung, since the industry sees some NGOs, including HRW, as having unreasonably high expectations of progress on this complex issue.
Fox feels the RJC in particular was unfairly challenged. “An organization such as the RJC looks at the continuous improvement it has to make, with new platforms and new sustainability solutions,” he says. “We’re talking about huge, costly, big-thinking steps that are inherently doing good, not just for our industry, but for the world as a whole. And you can’t solve big problems in one fell swoop.”
The RJC itself rejected the criticism following the report’s release, repudiating “the suggestion that RJC has got ‘flawed’ standards, governance and certification systems,” a spokesperson said at the time. “In their correspondence with the RJC, Human Rights Watch have themselves recognized that the RJC has helped make [jewelry] companies ‘aware of the importance of responsible sourcing and [adopting] more responsible practices.’”
Of course, the statement clarified, the RJC is “continually open to comprehensive and transparent review to ensure they continue to advance the cause of responsibility in the industry.”
Already working on it
That kind of pushback was expected, and even encouraged, largely because so many in the trade rely in part or entirely on the RJC to create an ethical sourcing chain. But other organizations and companies are stepping up their own game in that field; Stevens says some of the larger companies have begun to enact tougher standards for their suppliers.
“The Kimberley Process itself is looking at expanding the definition of ‘conflict,’ but as a bureaucratic process, this will take time,” she observes, explaining that the expanded definition will likely include human rights and environmental issues.
Meanwhile, some of the major jewelry brands are revising their protocols to create stricter guidelines. Tiffany & Co. — which the HRW report ranked as “strong” in terms of social responsibility — publicly publishes its ethics codes, as do Bulgari, Cartier, Pandora and Signet — all of which received a “moderate” ranking from HRW.
Signet, for example, reexamines its protocols continually. “This year, we are revising our Signet Responsible Sourcing Protocols (SRSPs) to streamline communications with our supplier community,” says Bouffard. “In a similar spirit, we’re working through important industry organizations, like the World Diamond Council (WDC), in support of its Kimberley Process (KP) reform initiatives, and...to see to it that the WDC System of Warranties and the KP Certification Scheme keep pace with society’s expectations.”
Signet works through the RJC and relies on it for supplier certification and verification, notes Bouffard, but “we also support the Diamond Development Initiative (DDI), which has developed its Maendeleo Diamond Standards, and the RAGS Forum, which is working on bringing conflict-free gold out of the eastern Democratic Republic of Congo, demonstrating that it’s possible to source conflict-free gold in a conflict-affected area.”
Liz Chatelain, owner of consumer research firm MVI Marketing in Austin, Texas, touts the gem and jewelry industry’s use of new technologies such as blockchain to improve sourcing protocols. “There’s a blockchain custody system that’s just now coming online,” she says. “They can completely track the gold and the diamonds. And if you’re on that chain of custody, you’re in, and if you’re not, you’re out.”
What can stores do?
Still, the JA’s Bonaparte says the onus lies with stores. “It’s retailers that have the direct interface with the consumer,” he says. “[The JA] can provide the tools, and companies like De Beers can demonstrate that they’re practicing responsible sourcing. But it starts with the source — the mines — and ends with retail.”
Some retailers have already been working to improve the traceability of their supply chain. But even the most ethically minded stores accept that it’s a process.
“We all know that we need to consistently do better,” says Kathy Cary, diamond buyer at Skeie’s Jewelers in Eugene, Oregon. “It’s one of the bigger reasons we partnered with [De Beers diamond brand] Forevermark. They’re way more transparent and looking to reduce human rights issues. We do what we can where we can, and we always need to do better.”
Fox, who notes that Bixler’s is a Forevermark Manufacturers (FMM) partner, says finding the right corporate partners is crucial. “When you look at stores selling Forevermark, it is making an impact,” he says. “It’s a great mix of standards and marketing, and it’s not relying on governments or NGOs.”
Stores that aren’t sure how best to address ethical concerns should reach out for assistance, advises Stevens. “The best thing anyone can do is to ask questions. Ask your consumers what ‘ethical’ means to them, and what assurances they’re looking for. Ask your suppliers all about their processes and sourcing methods to better understand your impact and part in the supply chain.”
Retailers looking for help can turn to organizations such as the Jewelry Industry Summit, the RJC, the Diamond Producers Association (DPA), the WDC and the Diamond Empowerment Fund (DEF), all of which are working to develop standards and messaging to help expand ethical-sourcing considerations, she says.
Cary believes reports like HRW’s will push the industry to improve, even ahead of customer demand.
“Retailers of conscience are going to look at reports like these and say, we need to move toward recycled and ethically sourced goods,” she says. “Everybody wants to feel really good about what they’re buying at multiple levels. Of the customers who come in, maybe 10% care, so this is really [about] the conscience of the retailer.”
This kind of messaging is especially important now, with the industry getting smaller and losing customers to experiences and online stores. “A lot of retailers and vendors and manufacturers are not going to be able to hold up under any kind of scrutiny for chain of custody,” remarks Chatelain. “They can’t guarantee where something is coming from. And it’s going to force our industry to contract even more.”
Ultimately, stresses Bouffard, even with resources such as the RJC’s available, companies need to take advantage of those resources “by prioritizing this subject internally, joining industry bodies, and applying to their own business operations approaches that have been developed to meet specific risks in their supply chains.” Businesses must recognize that this is something they have to do themselves, he says, “and not something someone else can do for them.”
Image: José Nicolas / Sygma via Getty Images; Human Rights WatchArticle from the Rapaport Magazine - May 2018. To subscribe click here.