Corporate Responsibility And Consumer Confidence

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  • Welcome. Thank Gaetano Cavalieri for his vision and commitment to CIBJO, and ultimately, to the industry as a whole.

Transcript

  • 1.
    • Corporate Responsibility and Consumer Confidence: The Retail Jewelers’ Perspective
    • Remarks by Matthew A. Runci
    • President & CEO
    • Jewelers of America
    • CIBJO Congress
    • Hong Kong
    • March 4, 2005
  • 2.
    • Protecting the Reputation of Our Products and Our Businesses:
    • Managing Social, Ethical and Environmental Risk
  • 3.  
  • 4. Consumer Awareness As consumers we all are asking more questions today about the products we buy
          • Sharpened value assessments
          • Heightened product safety concerns
          • More detailed content disclosure
          • Social, ethical and environmental issues
          • Third party verification
          • Brand awareness
  • 5. NGO Campaigns, Media Coverage and their Effects
      • Nike – Labor Standards
      • Exxon Mobil – Environmental devastation
      • Kathy Lee Gifford – Child Labor issues
      • Philip Morris – Product Liability
      • Shell Oil – Human Rights
      • Addidas and other athletic brands – 2004 Olympics
  • 6. Positive CSR Positioning Corporate Initiatives
          • Timberland
          • Patagonia, Inc.
          • Body Shops
          • Starbucks Coffee
          • Wal-Mart
          • Home Depot
          • Kraft Foods
      Striking a balance Starbucks fourth annual Corporate Social Responsibility Report describes our social, environmental and economic impacts on the communities in which we do business… The Body Shop is a strong global brand and a business with a deep commitment to social and environmental issues. Back in 1976, Anita Roddick created a niche in the marketplace with her unique approach to selling natural cosmetics. Today the natural cosmetics sector is highly evolved and competitive. Inevitably, this has impacted sales as the number of customers buying our products has declined in recent years. Many loyal customers continue to buy our products. There are also many consumers who have an affinity with our brand and visit our stores. However, we need to convince them that we have the right product and customer service to meet their needs. My challenge as CEO, is to revitalise our retail outlets, grow composite store sales, improve our product offer and brand communications, and invest in employee development and customer service. We will improve supply chain performance through investment in technology, and strengthen our relationship with the franchisee network. In delivering this plan, we will consistently apply our social and environmental principles and demonstrate integrity and transparency in our relationships with our stakeholders. Our real commitment to progressing our social and environmental agenda does not lie in the reporting itself, but in our strategic decision-making, our actions, and our behaviour towards stakeholders. As someone who is committed to delivering value to shareholders, I believe that looking after the interests of all our stakeholders will help us realise our potential as a successful and sustainable business. Peter Saunders Chief Executive Officer
  • 7. Positive CSR Positioning Industry Initiatives
      • Tea Sourcing Partnership
      • Marine Stewardship Council
      • Forestry Stewardship Council
      • Round Table on Sustainable Palm Oil
      • World Cocoa Foundation
  • 8. Level of collaboration
    • Ethical Tea Partnership
    • Forest Stewardship Council
    • Ethical Trading Initiative
    • International Cocoa Initiative
    • Elimination of Child Labour in Tobacco Growing Foundation
    • SEDEX
    Examples
    • collaborators will need to invest time at the outset in order to agree the common standard and joint implementation approach. Compromises may be needed.
    • May be difficult politically for collaborators to disengage from process
    • Slower process
    • Protection of competitive advantage and commercial information.
    • influence over business partners maybe limited where small volumes are traded
    • duplication is likely
    • resources are not pooled
    • Different requirements will remain
    • Quality and consistency of information being shared varies greatly
    • Due to inconsistencies in codes or implementation standards and lack of reliability of data, duplication may persist
    Dis-advantages
    • business partners have a clear understanding of what is expected
    • maximise resources and potential impact
    • avoids duplication of effort
    • maximises leverage and influence over business partners in order to effect change
    • business partners have a clear understanding of what is expected
    • options to collaborate in an ad-hoc manner giving collaborators maximum flexibility and creativity
    • no agreement necessary on standards or implementation framework
    • may help reduce duplication of effort and cost
    • Improved awareness of risk
    Advantages
    • Common standards
    • Joint implementation programmes
    • Multi-stakeholder approach
    • Common standards
    • Different implementation programmes
    • Some collaborative research and / or implementation efforts
    • Mutual recognition
    • Different standards;
    • Different implementation programmes
    • Agreement to share information in a structured manner.
    Typical features Full Collaboration Partial Collaboration Information Sharing Collaborative spectrum
  • 9. Examples and outputs of industry-wide collaborations
    • Provides a portal for sharing information
    • Aim is to ease burden on suppliers as well as companies
    Looks at a number of sustainability issues of the industry, including responsible sourcing.
    • Covers a wide range of sustainability farming issues as well as a focus on child labour.
    • Focus on training.
    Site visits are conducted on behalf of ETP and results shared between all members Panel of experts providing stakeholder input into an individual company. Focus on one key issue, i.e. child labour
    • Includes community, labour and environmental issues.
    • FSC trademark may be used on timber products that have been FSC certified.
    • Multi-stakeholder approach
    • Corporate members must meet criteria for entry and must report performance annually to ETI
    Key Features
    • Best practice framework for managing CSR risks in supply chain.
    To improve the sustainability of the ICT industry Global ICT companies, trade union, UNEP Global e-Sustainability Initiative (GeSI)
    • Awareness raising
    • Support of local cocoa growing and responsible labour and environmental initiatives
    A program to promote cocoa farming in a sustainable, environmentally responsible manner through training. Global cocoa companies, trade unions and NGOs World Cocoa Foundation
    • Stakeholder engagement
    Provide input into company policies, products and biotechnology-related issues. Independent advisory body established by Monsanto comprising of individual biotechnology policy, business and opinion leaders. Biotechnology Advisory Council
    • Joint monitoring of tea estates and factories
    • Common monitoring methodologies
    To understand how tea is sourced and to assess conditions on tea estates and factories by monitoring UK tea companies Ethical Tea Partnership
    • Database of information pertaining to labour conditions and practices at supplier sites
    To make it easier for suppliers to provide information on labour standards and to reduce duplication. Food and apparel companies SEDEX
    • Statement of principles
    • Support of research and local community projects
    To contribute to the elimination of child labour in tobacco growing International trade unions, tobacco growers association and corporations dealing in tobacco Elimination of Child Labour in Tobacco Growing Foundation
    • Common standards and policies
    • Certification and accreditation scheme
    • Widely recognised trademark
    To promote environmentally appropriate, socially beneficial and economically viable management of the world’s forests International association of members including environmental and social groups, companies in the timber and forestry industry, community forestry groups and certification organisations Forest Stewardships Council
    • Shared standard and supporting principles of implementation
    • Library of relevant resources
    • Research projects
    • Capacity building and training
    • Multi-stakeholder “roundtables”
    To promote and improve the implementation of ethical supply chain corporate codes of practice Companies, NGOs and trade union organisations. Companies are primarily from the food and apparel industry but looking to expand to other industries Ethical Trading Initiative Output to date Objective Industry / product Collaborative scheme / initiative
  • 10. Positive Brand Positioning
    • Corporate Initiatives
      • Tiffany & Co.
      • Signet PLC
      • Cartier International
      • Zale Corporation
      • Wal-Mart
      • Rio Tinto
      • BHP Billiton
      • Diamond Trading Company
      • Newmont Mining
      • Other Gold Mining Companies
  • 11. Positive principles and practices
    • Some examples of positive institutional initiatives
          • World Diamond Council (WDC) System of Warranties
          • Resolutions of World Federation of Diamond Bourses (WFDB) and International Diamond Manufacturers Association (IDMA)
          • American Gem Trade Association Code of Ethics (AGTA)
          • Jewelers of America SEE Principles and Supplier Code of Conduct (JA)
          • International Council on Mining and Metals Sustainable Development Framework (ICMM)
          • National Mining Association Sustainable Development Principles
          • CIBJO Code of Ethics: Best Practice Principles (Ethics Commission)
  • 12. Headlines – past and present “ The Tzisa is dead.” Bransislav Blazic, Environment Minister of Serbia, after the cyanide spilled from a Romanian gold mine, polluting the Tsiza and then the Danube River which empties into the Black Sea. The spill has been called the worst environmental disaster since Chernobyl. THE WASHINGTON POST February 15, 2000 The gem seekers of Madagascar are digging their way through one of the globe's richest natural environments Individuals are seeking riches by exploiting a land of unparalleled bio-diversity. Driven by the arrival of dozens of precious-stone dealers from overseas, the sapphire seekers are digging their way through one of the globes richest and most unusual natural environments. Financial Times, February 3rd 2001 Mining Giant Warned on Pollution in Indonesia An internal company report warned top executives at the world’s largest gold producer in 2001 that the company was putting tons of toxic mercury vapors into the air in Indonesia. Some thirty-three tons of mercury that Indonesian officials say should have been collected and sent to a legal dump were instead sent into the air and sixteen more tons were released into the bay, the report says. The New York Times December 22, 2004 “ All conflicts in sub-Saharan Africa are due to conflict diamonds.” Representative from the United Nations High Commission for Refugees Jewelry industry looses its sparkle, as children continue to cut and polish! Leading British and US based NGOs lead the charge against the jewelry industry. They claim that not enough is being done to curb the use of child labour in diamond and gemstone cutting and polishing, citing that in India, the world’s biggest diamond and gemstone cutting centre polishes 70% of world’s diamond yield. NGOs estimate that children account for 10% of diamond polishers. Financial Times, June 2002 “ Much-Smuggled Gem Called Tanzanite Helps Bin Laden Supporters” “…’ snakes’, the term for boys who sift piles of grit in the surface and sometimes wriggle into the crevices too small for adults.” Wall Street Journal November 16th 2001
  • 13. NGOs: Media Communications
  • 14. NGOs: Campaign images
  • 15. NGOs: Public Demonstrations
  • 16. Grassroots Public Advocacy
  • 17. A Partial List of NGOs Active on the Conflict Diamond and No Dirty Gold issues
    • Some NGOs engaged jewelry industry issues that you may already be aware of:
      • Global Witness
      • Partnership Africa-Canada
      • Physicians for Human Rights
      • Amnesty International
      • Oxfam
      • World Vision
      • Action Aid
      • One Sky
      • World Wildlife Foundation
      • Rainforest Action Network
      • Greenpeace
  • 18.
    • And some whose involvement you may not be aware of:
      • Save the Children
      • United Church of Christ
      • United Methodist Committee on Relief
      • United Methodist Church
      • Commission on Social Action of Reform Judaism
      • Canaan Christian Fellowship Fund
      • Catholic Relief Services
      • Society of St. Ursula
      • American Friends Service Committee
      • Evangelical Lutheran Church in America
      • Lutheran World Relief
      • Mennonite Central Committee
      • Maryknoll Office of Global Concerns
      • National Council of Churches
      • UNICEF
      • UN Children's Fund
      • Christian Children's Fund
  • 19. Why do SEE issues matter?
    • PRODUCT IMAGE:
    • We Represent Our Industry’s Products As:
    • Signs of achievement, milestones, class and security
    • Symbols of love, happiness and wealth
    • Luxury goods that all may aspire to own
  • 20.  
  • 21. Jewelry Supply Chain Risk Assessment 
  • 22. SEE principles cover
  • 23. High Medium Low Level of Impact Likelihood of it becoming an issue SEE Risk Assessment The issue criticality matrix
    • Training & Development
    • Employment
    • Tax evasion
    • Procurement transparency
    • Human Rights
    • e.g. Conflict diamonds
    • Labor rights e.g. child labor
    • Distribution of
    • economic benefits
    • Environmental issues
    • Business Integrity
    • e.g. Money Laundering
    High Medium Low Risk assessment carried out by Jewelers of America and PricewaterhouseCoopers
    • Security issues
    • Health & Safety
    • Wages & Benefits
    • Product integrity
    • Dislocation of peoples
    • Diversity &
    • equal opportunities
    • Employee satisfaction
    • Profitability
    • Anti-trust
  • 24. Jewelry Value Chain Actors – A risk map
    • Strong HSE policy &control mechanisms
    • Emerging social community and human rights controls
    • No controls in place
    • Serious Health, Safety and Environment
    KEY = Risk see non compliance RED = HIGH RISK ORANGE = MEDIUM RISK GREEN = LOW RISK Trading Cutting & Polishing Large Workshops (500-3000 workers) Manufacturers Agents/ Distributions Retailers Smaller Workshop Smaller Workshop Smaller Workshop Smaller Workshop Mining Large Scale Mining Small Scale
    • Labor practices poor
    • Transparency low
    • No controls in place
    • 20-40 people
  • 25. SEE risks - by issues in the value chain
  • 26. SEE risks - by issues in the value chain
  • 27. SEE risk assessment - by product
    • Product type Matters to consider Level of Risk (% of sales by value)
      • Diamond jewelry (30%)  Diamonds constitute up 46% of sales revenue Very High
      • Loose diamonds (16%)  Currently high level of NGO activity
      • Gold: (11%)  Luxurious good, similar exposure to NGO action as diamonds High
      • Colored gemstone (9%)  Diverse range of products, more difficult to control risks High
      • jewelry
      • Repair/ custom work: (10%)  Retail section focus of ‘code of ethics’ Medium
      •  Most NGOs focusing on developing world issues
      • Watches (4%)  Reputation risk carried primarily by brands Low
      • Platinum: (3%)  Minor product as a percentage of both value and quantity Low
      •  Develop solutions where overlap exists with gold.
      • Silver (2%)  Higher percentage of sales by quantity (as opposed to value) Low
      •  Active consumers in regard of reputation issues
  • 28. Defining Social, Environmental and Ethical (SEE) Issues for the Jewelry Industry
    • Human and Labor Rights
    • Conflict Diamonds
    • Child Labor
    • Working conditions
    • Slave Labor
    • Safety conditions in mines
    • Environmental
    • Use of hazardous materials in mining operations
    • Mining in ecologically sensitive areas
    • Degradation of biodiversity
    • Ethical/Legal
    • Money laundering
    • Terrorist financing
    • Gem smuggling
    • Misuse of revenues by government officials
    • Bribing of public officials
    • Tax evasion
    • Underkarating of gold
    • Improper / ineffective disclosure of diamond and colored
    • gemstone treatments and synthetic gemstones
  • 29. The “ New Integrity Equation ”
    • Your existing reputation in business is based on the things you did yesterday. Maintaining that reputation in the future depends on what you choose to do today and tomorrow.
    • Consumers today are holding retailers (brands) accountable not only for those situations that are within their immediate universe of control, but also for situations within a much broader sphere of influence. It’s not just about the jeweler’s practices in their shops, but rather about the full life cycle of the product they bring to the market. Accountability for what happens at each level of the supply chain is now spread throughout all levels of the supply chain. The retail jeweler is the face of the industry to the consumer and is therefore face of accountability for the entire industry to the public.
    • Consumers trust in the jeweler alone is not likely to offset fully a strong negative image associated with the integrity of the product itself. A positive image of the product is the starting point for the jeweler’s value added confidence-building. The jeweler can add confidence to the equation but he is challenged if he bears responsibility alone to offset a negative product image that poses a risk to continued consumer confidence. Preserving consumer confidence in the product is the foundation for a jeweler’s ability to establish and maintain consumer confidence in his business.
  • 30. Conflict diamonds: Impacting on consumer choices?
    • Source : Taylor Nelson Sofres face-to-face omnibus poll: 2,053 representative sample of British adults; interviews carried out for ActionAid between 17-21 January 2003.
    • Because of a new international agreement, (KPCS) jewelers should now be able to guarantee that their diamonds are ‘conflict free’.
    • Would you buy diamond jewelry if the jeweler could not guarantee this?
    • Yes 30%
    • No 70%
  • 31. Conflict Diamonds: Registering in Consumers’ Awareness?
    • JCOC Survey Results
      • A survey conducted in July 2003 by the Jewelry Consumer Opinion Council (JCOC) found that 26% of diamond jewelry consumers in the United States were aware of the term “conflict diamonds,” compared with 16% in December 2002, 9% in May 2001 and 7% in October 2000.
  • 32. 2004 Cone Corporate Citizenship Study (US)
    • An overwhelming 90% of Americans responding to a recent study say they would consider switching to another company’s products or services if they felt the company had behaved illegally or unethically.
    • A full 81% say they would speak out against the “offending” company among family and friends, while 73% say they would boycott that company’s products or services.
    • Will the jewelry industry gain benefits, beyond not losing customers, from corporate social responsibility efforts? According the Cone study, the answer is yes. Consumers will reward companies that play a more active role in meeting society’s needs. The study shows that 86% would switch from one brand to another, if the latter brand was associated with a cause. A full 85% say they assess a company’s commitment to social issues when choosing it, while 74% say they use such information in deciding whether to recommend a company to other people.
  • 33. Cone Study 2004 (continued)
    • The study also shows that companies need to do a better job in publicizing their corporate responsibility efforts. . . . A clear majority of Americans want companies to talk about their efforts, but only 4 in 10 say companies are doing that well. For senior executives these facts are a mandate for action on social issues. For marketing executives they are license to communicate the company’s commitment and efforts.
    • The Gen Y generation (aged 18-25) are significantly more likely than older people to consider a company’s citizenship practices when making purchase decisions.
  • 34. Worldwide Trends
    • Consumers worldwide are becoming more and more active in
    • directing their spending towards goods that meet their ethical
    • expectations and boycotting companies and brands that
    • are seen as exploiting suppliers.
    • Environics International’s latest Annual CSR Monitor reported
    • that 27% of consumers across 25 countries have punished
    • companies for being socially irresponsible and another 21%
    • have considered doing so.
    • A recent survey by the Co-Operative Bank (UK)found that 30%
    • of consumers believed that they could best influence the
    • corporate responsibility of business through ‘boycotting
    • companies that I feel are unethical’ .
  • 35. JA – supporting members to manage social, ethical and environmental risk
    • Taking an industry wide approach to these issues
    • SEE issues are often complex and impact the reputation of the products we sell as opposed to specific individual retailers. As such, as an industry we have a collective interest to manage social, ethical and environmental risks that may impact on the reputation of our products.
    • JA has been playing an important leadership role in this arena by establishing a non-commercial umbrella initiative for the entire US industry and through collaboration with leading corporate entities and international trade associations, e.g., CIBJO, for significant portion of the industry worldwide.
    • To date JA has:
    • Proactively addressed SEE issues relating to the jewelry industry
    • Adopted JA Social, Ethical and Environmental Principles for retail jeweler member companies
    • Established an Ethical Initiatives Committee as a standing committee of the board of directors
    • Established two subcommittees focusing on human rights and the environment
    • Begun stakeholder engagement with key NGOs that focus on these issues
    • Adopted the JA Supplier Code of Conduct for companies that supply JA member retail jewelers
    • Work continues on strengthening the credibility of JA’s commitment to SEE issues through
        • Capacity building among members
  • 36. JEWELERS OF AMERICA RETAIL JEWELERS SEE PRINCIPLES National Security (AML Compliance) Supporting Communities Promoting Equitable Equitable Economic Development Promoting Business Integrity Protecting the Environment Respecting Labor Rights Respecting Human Rights
  • 37. JEWELERS OF AMERICA SUPPLIER CODE OF CONDUCT Communication Monitoring Conflict Diamonds Forced Labor Remuneration Ethics & Integrity Harassment and Abuse Health & Safety Environment Discrimination Legal Compliance Freedom of Association Working Hours JA Members’ Commitment to Suppliers
  • 38. CIBJO Code of Ethics (2004)
    • Best Practice Principles
    • These principles are designed to ensure that best practice is observed in the jewelry industry:
    • 1. Consumer Confidence
      • We are committed to operating our businesses with a view to ensuring that consumers buying jewelry are able to rely with confidence on the professional and ethical standards and technical skills of the jewelry industry, taking account of the following:
        • (a) gemstones are objects of prestige, generally acquired for sentimental reasons and are regarded as an item of value by the consumer;
        • (b) the consumer has limited expertise about gemstones and consequently, in order to make an informed choice, the consumer is reliant on (i) the standards and integrity of the jewelry industry, and (ii) information from the jewelry industry as to cut, color, clarity and carat weight and other attributes, including the application of any treatment as described in the CIBJO Blue Book;
        • (c) the highest professional and ethical standards and technical skills are necessary to ensure that consumer trust is not misplaced and that the reputation of the jewelry industry is maintained and enhanced;
        • (d) the non-disclosure of treatments, and the passing off of partly or wholly synthetic stones and simulants as natural stones, is contrary to the interests of consumers;
        • (e) the injury and hardship suffered by local populations (and the potential for it) when conflicts arise in gemstone producing areas are unacceptable, as is seeking to profit from such conflicts.
  • 39. CIBJO Code of Ethics
    • 2. Business Practices
      • We are committed to operating our businesses in such a way that we neither engage in, nor encourage in any manner, the following practices which are regarded as unacceptable and against the public interest and that of the jewelry industry:
        • (a) buying and trading rough gemstones from areas where this would encourage or support conflict and human suffering;
        • (b) the use of child labor;
        • (c) practices which intentionally or recklessly endanger or harm the health or welfare of individuals;
        • (d) conduct which conflicts with the principles set out in (1) above, thereby bringing the jewelry industry into serious disrepute.
    • 3. Commitment
      • We are committed to the highest industry ethics including the following:
        • (a) action to address concerns arising out of the misuse of rough gemstones in support of conflict and regular discussions on other issues relevant to the jewelry industry to enable appropriate and timely industry responses;
        • (b) the provision of proper working conditions (including the health, safety and well-being of workers);
        • (c) the dignity of individuals and best practices to ensure the fair treatment of individuals;
        • (d) full compliance with international best practice and the related regulatory framework with respect to the environment;
        • (e) full disclosure at all levels of the jewelry distribution chain and, most importantly, to consumers, of all treatments to natural gemstones and of wholly or partly synthetic stones and of simulants and compliance with the rules, regulations and guidelines published from time to time by CIBJO.
  • 40. CIBJO Code of Ethics
    • The World Jewellery Confederation (CIBJO) is introducing best practice principles to ensure the jewelry industry is run in an ethical and professional way.
    • CIBJO is committed to abiding by these principles and is making it a condition of membership to comply with them. Moreover the principles are formulated to ensure that CIBJO members encourage adherence to them at all levels of the supply chain down to the consumer. CIBJO will also encourage other industry organizations to adopt these principles.
    • The implementation and monitoring of these Best Practice Principles will ensure consumers buying jewelry will be able to rely with confidence on the ethical standards of the jewelry industry.
  • 41. Comparative Benchmarking: CIBJO and Other Organizations
  • 42. Comparative Benchmarking (continued)
  • 43. Vision - Where do we want to be in 2-3 years time?
    • The reputation of our products, our businesses and
    • our brands are protected
    • To be in a position to communicate confidently about the integrity of the products we sell to our customers
    • To have a well established and resourced foundation for the jewelry sector on corporate responsibility and consumer confidence
      • that is global in nature;
      • with active participation from all segments of the jewelry supply chain;
      • membership to which would be voluntary in nature and be open to any member of the jewelry supply chain – regardless of size, sector, brand and cultural grounding - that is committed to operating in a responsible manner
      • that builds on the work already done by others (national and international industry bodies, jewelry retailers and diamond and gold producers)
  • 44.
    • CIBJO Ethics Commission Meeting
      • Sunday, March 6, 2005
      • Harbour Room
      • 2:00 - 5:00 pm
    CIBJO’s Opportunity