By Russell Shor

Corporate responsibility is a growing issue with consumers and, of course, governments around the world. In our industry, the vast majority of businesses have long, solid records of responsible, ethical behavior – but we’ve fallen behind the curve of public opinion on such issues as conflict diamonds, money laundering and the environment. Non-governmental organizations (NGOs) and the media have led the debates on these issues in the press and in government, forcing our industry to defend itself against practices of which only a few businesses are guilty.

Recently, we’ve seen a number of large jewelry retailers and mining organizations institute codes of good business practices for themselves and their clients. They want to ensure that they keep good corporate company and show governments, civic groups and the world that they are doing so.

As the movement grows, however, businesses may face the ordeal of having to cope with a morass of confusing and possibly conflicting standards – like trying to follow the traffic laws of all 50 states at once. And what about smaller firms that lack the clout to enforce good business standards from their clients?

Matt Runci, CEO of Jewelers of America (JA), announced a possible solution to this situation in November – an initiative to unify the various codes of conduct into an industry-wide standard that would cover the following key areas:

• Business integrity. This will focus mainly on two areas:
  (1) disclosure of all treatments and synthetics, and (2) adherence to   guidelines governing financing and money laundering.
• Human rights and labor practices. This focuses on conflict diamonds and related issues, as well as on workplace safety, fair labor   practices and child labor.
• Environmental issues. This will focus on safe, clean mining and manufacturing processes.

Runci, addressing the Antwerp Diamond Conference just after announcing this effort, said this initiative is a necessary, proactive means of accomplishing two important goals:

• Reducing opportunities for unscrupulous operators to take advantage of the traditional trust within the jewelry industry.
• Seizing the public relations agenda from groups who have become progressively hostile to the diamond and jewelry industries.
 
The idea arose out of a study by PricewaterhouseCoopers, which found that other industries have seen consumer and investor confidence undermined by criticism from NGOs and negative press reports. Our industry is particularly vulnerable, the study noted, because purchases are “entirely discretionary.”

The study, which was commissioned by JA, warned that inaction in the face of this situation would keep the industry on the defensive, “responding to agendas framed by others.” Although, Runci noted, the study also warned that “doing something” posed some risks as well – mainly attracting attention to what many consider a “non-problem from a consumer awareness standpoint.” He stressed that the risks of doing nothing far exceeded the latter risks. 

JA brought together various companies and organizations that had already introduced “public” sets of business practice principles in November. These included ABN AMRO Bank, BHP Billiton, Cartier, the De Beers Diamond Trading Company (DTC), Rio Tinto, Signet/Kay Jewelers, the National Association of Goldsmiths (UK), Tiffany and Zale Corporation. In what was called the Early Adopters’ Initiative, they agreed to work toward realizing the goal of ethical, transparent business practices through a set of common standards.

The idea sounds logical – one that would fly immediately.

Unified action, however – even for a noble cause – can be very difficult when entrenched ideas and inflated egos are involved. One such entrenched idea among a number of major powerful organizations and corporations is that “high standards are great – as long as everyone adheres to ours.” 

The Early Adopters’ Initiative can neutralize this potentially fatal situation. It is creating a Foundation that will draw up an effective group of standards, based on the above, that could serve as bedrock principles for the entire industry, thus removing the necessity of conforming to a competitor’s set of regulations.

Gareth Penny, managing director of the DTC, said in an interview during the Antwerp Diamond Conference that “it is very important that we create an industry standard.”
He also noted that such a standard “would help smaller companies who have very little clout of their own convince their clients and suppliers to adhere to standards of good business practice.”

BHP Billiton’s Terry Janes noted at the conference that developing an industry-wide set of principles “won’t be easy, because the industry is very fragmented and rarely works together.”

“However,” he added, “the Kimberley Process can serve as a model because it was one area where everyone came together in their best interest.”

Peter Gross, former head of the International Diamond & Jewelry Group of ABN AMRO Bank, had an answer for skeptics who believe such an initiative will add costs and bureaucracy to their business: “Consumer confidence is not an isolated objective – it is the sum total of the individual behavior of each company.”

We have been on the defensive in the jury of world opinion during the past five years, since the conflict diamond controversy broke. A truly independent foundation that articulates the high standards to which most companies and individuals have long adhered would enable our industry to restore its diminished credibility. It would also offer a cynical world tangible evidence that our industry is committed to these standards without being coerced by laws or consumer actions.