Context

Our supply chain is characterised by high quality and specialised products and long-term relationships with our suppliers. This puts us in a position to be able to promote good practice among suppliers.

The responsible sourcing of certain raw materials, such as gold and diamonds, involves a long and complex supply chain and requires a partnership approach. Working collaboratively with industry partners means we are better able to effect wider and long-term change in the luxury goods supply chain.

Our approach

Our approach reflects the nature of our supply chain. We seek to influence our suppliers and sub-contractors by sharing our own standards and expectations of them. These are set out in our Supplier Code of Conduct. Maisons collaborate internally and make use of tools to share information and identify common suppliers who have been advised of Richemont’s Code.

Compliance with the Code is incorporated into our procurement decisions and all suppliers are expected to acknowledged the Code.

Business partners are treated fairly and in line with our code of business ethics.  We also work closely with industry organisations such as the Responsible Jewellery Council (‘RJC’).

Working in partnership

Supplier Code of Conduct

Richemont’s ‘Model’ Supplier Code of Conduct forms part of the Group’s CSR Guidelines. The Code covers labour relationships, employment practices, human rights and ethical business principles. The Code is based on internationally-recognised principles such as the International Labour Organisation Conventions and Universal Declaration of Human Rights. It also addresses specific industry-related issues such as animal testing, preservation of endangered and protected species and responsible sourcing of diamonds and gold.

Compliance

Each Maison is responsible for working with its own suppliers and to formally share the Code content with them.

Using a risk-based approach, some of our Maisons conduct third party external audits of suppliers’ compliance with the Code. Other Maisons perform internal audits of key suppliers as part of their internal risk management processes. The results of the audits are directly linked to the Maisons’ purchasing strategies. Where audits identify areas for improvement, Maisons follow up with remedial action as part of the on-going supplier relationship. Neither supplier audit findings nor the remedial actions arising from them are publicly disclosed.

Certain suppliers to the Group’s businesses are also members of the RJC and will be completing their own RJC certification as appropriate. The Group does not systematically record its suppliers’ certification.

Each Maison has different products and different supply chains. They are free to tailor the Code to their own business needs to ensure its effectiveness, including compliance with REACH (European Union regulation concerning the Registration, Evaluation, Authorisation and restriction of Chemicals).

Animal testing

Neither Richemont nor its Maisons conduct any testing of its products on animals.

Cartier Parfums does not perform any tests on animals for its fragrances, neither in Europe nor outside Europe. The European Regulation regarding Perfumes and Cosmetic Products prohibits such practices, and enforces the same for the ingredients, insofar as valid alternative methods exist. Cartier Parfums relies on and strictly follows the Perfumes and Cosmetic European Regulation.

Van Cleef & Arpels, Montblanc, Alfred Dunhill and Chloé have license agreements with third parties for fragrances and other cosmetics. Those Maisons have received assurances from their suppliers that no licensed products are tested on animals.

All of these Richemont Maisons’ practices accord with Richemont’s Supplier Code of Conduct, which states that ‘Suppliers should adhere to the principles of Corporate Standards of Compassion for Animals ensuring that no animal testing is conducted or commissioned during any stage of product development or manufacture.’

Local procurement

Many of our Maisons have a tradition of supporting a particular region through purchasing raw materials and employing local people from the area. This is particularly true of the Maisons that are involved in the art of watchmaking in Switzerland and Germany.

Performance data

Some 60 external supplier audits were performed across the Group in 2010/11. This was significantly higher than last year’s level. The Group does not record the percentage of ‘surprise’ audits carried out, but certain of the Group’s businesses have changed supplier or worked with suppliers to have them implement changes as a consequence of audit findings.

The Group does not disclose the percentage of suppliers that have been screened in respect of human rights, nor does it disclose incidents of Supplier Code non-compliance nor the remedial action taken.

Looking ahead

Further external supplier audits are planned in the coming year. By December 2011, those Maisons who are members of the RJC will be audited by an accredited third party auditor to verify compliance with the RJC’s own Code of Practices.

A further 30 to 40 supplier audits are likely to take place in the coming year.

Case studies

Cartier’s Responsible Jewellery Council (‘RJC’) Certification