Rapaport Magazine

The rewards of ethical gold

Following the closing of fair-trade gold supplier Cred, Estelle Levin-Nally of Levin Sources published a post on LinkedIn that opened a vivid debate. Martin Rapaport shares his views on the situation

Estelle Levin-Nally, CEO and founder of Levin Sources, wrote:

“The UK jewellery community is shocked and saddened to hear of the closure of one of our flagship brands for #ethicaljewellery. #CRED Jewellery has been a pioneer, a trailblazing trade facilitator for Fairtrade International’s Fairtrade #Gold, and a strong voice in the market and in the policy arena. Always a friend to the small miner, CRED was founded by Greg Valerio MBE and later led by Alan Frampton. I’ve had the pleasure to work with both (including designing their ethical business policy over 10 years ago!) as allies to push for not just #responsiblesourcing but #sustainableproduction in the gold sector. There is a lot to learn from their experience, and their closure. But my worry is that a) this may create a tight market for Fairtrade gold in the UK; will Fairmined have enough product to absorb this demand? Can Fairtrade overcome trade barriers to deliver product into the UK marketplace efficaciously without Cred? And b) this could signify a change in consumer appetites for ethical #jewellery (though I really find this hard to believe given the seismic shift that is happening amongst consumers towards ethical products.) What are your views on the above? How should the sector respond?”

Martin Rapaport’s response

Sorry to hear about Cred. Remember supporting Greg Valerio by purchasing one of his first gold shipments — it’s still in our safe. Thank you Estelle for raising the issue of the economic sustainability of social responsibility.

The fair sharing of natural resources between the rich and poor, powerful and exploited, buyer and seller, is a fundamental socioeconomic political issue challenging society. The key question is: How can society balance the allocation of profits in a fair yet sustainable manner?

The commercialization of social responsibility is creating unprecedented opportunity for value creation. Who should capture this added value? How?

I believe in the creation of ethical, transparent, competitive, efficient markets and have found such activity and markets to be sustainable over the short and long term.

I believe we should create auction markets that allocate socially responsible products and profits. Let the high bidder pay for and win the opportunity of selling the added value created by artisanal diggers.

The commercialization of socially responsible artisanal production is a viable, sustainable business activity to the extent that the production and distribution of the product is honest, competitive and efficient. Allocations of profits should be based on free, fair, competitive market prices.

If artisanal diggers add value to a product because they are working in a socially responsible framework, they should be rewarded. So should the distributors who connect the product to consumers who want to feel good about spending their money fairly. But make no mistake about it — sustainable social responsibility is a business, not a charity.

When you mix business with charity and fail to draw profits, you create unsustainable development. Doing good, distributing good and selling good is a business. Society gets the level of good it is willing to pay for — no more and no less.

Artisanal gold competes with recycled gold which competes with unknown source gold which competes with dirty gold. Transparency and certification drive product segmentation that enables value capture. Consumers vote for what they want with their dollars. Consumers are best served when free, fair, honest, competitive markets provide consumers with the best and broadest range of choices.

Demand for socially responsible gold, diamonds and gems is increasing exponentially, providing an unprecedented opportunity for the jewelry industry.

The Rapaport Group will be moving forward with source certification programs for diamonds and the creation of auctions for socially responsible gold, diamonds, gems and jewelry.

I am sorry about Cred’s misfortune. Let this encourage us to secure the sustainability of our well-intentioned efforts to help artisanal miners through profitable business practices. Helping artisanal miners capture socially responsible added value is good business.

Let us be thankful for the opportunities we have to do good. Let us be thankful for the good work Greg Valerio and Alan Frampton have done. Let us learn that when it comes to sustainability, profits are a requirement for doing good.

There is a reason G-D gave gold, diamonds and gems to the poorest people in the world and made the richest desire them. Moving wealth from the richest to the poorest is doing G-D’s work. It is “Tikun Olam” — fixing the world.

Please share your comments and views with me.
Martin Rapaport

Image: Shutterstock

Article from the Rapaport Magazine - January 2020. To subscribe click here.

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