Responsible sourcing of raw materials

One of the key areas of focus for us in our supply chain relates to the procurement of industry specific raw materials such as gold and diamonds. Historically, for the luxury goods industry as a whole, there have been issues surrounding the sourcing of diamonds and gold, as these are often located in regions affected by conflict and instability.

Our Model Supplier Code of Conduct sets out our position on the following issues:

Conflict-free diamonds

We are committed to ensuring that the diamonds we use in our products have not been used to fund conflict or terrorism.

We adhere to responsible diamond procurement practices and require all our suppliers to adhere to the principles of the World Diamond Council Resolution on Industry Self-Regulation.

We expect our suppliers to comply with the Kimberley Process Certification Scheme, a voluntary system of diamond self-regulation created by The World Federation of Diamond Bourses and the International Diamond Manufacturers Association (IDMA). Compliance is monitored. This process relies on the voluntary creation of a chain of written warranties from invoice to invoice of all transactions involving the purchase and sale of diamonds, their cutting and polishing.

Responsible gold sourcing

As far as possible, Richemont requests its suppliers to provide assurance that the gold being supplied has been mined in a way which respects human and labour rights and the environment. We continue to work with suppliers and refiners in this respect to seek to improve controls over the supply chain, where possible.

In 2007/08, we have continued to work with the Council for Responsible Jewellery Practices (CRJP) to help improve the gold supply chain (see “partnerships”). In addition to this industry-wide approach, we have continued to work with our gold suppliers to strengthen the inclusion of ethical criteria at all levels of our gold sourcing supply chain.

Endangered or protected species

We require suppliers to comply with international and local legislation, for example the Convention on International Trade of Endangered Species (CITES).

Leather finished products

Suppliers involved in leather products manufacturing are expected to adhere to the European Leather Association (COTANCE) policies.

This year in response to the political situation in Myanmar (Burma), our jewellery Maisons – Cartier and Van Cleef & Arpels – have decided to stop purchasing precious stones from the country.

In addition to these areas we also have policies for perfumes and cosmetic products, animal testing and product information and labelling.

Partnerships

The supply chain for jewellery products is long, complex and involves different types of organisations all over the globe. For example, the supply chain for a diamond ring can include mining houses, gold refiners and smelters, banks and metal trading companies for gold and mining houses, trading houses and cutters and polishers for diamonds.

In cases like this, collaborating with others within the industry who share our commitment to social, ethical and environmental integrity in the supply chain, can have a real impact.

The Council for Responsible Jewellery Practices (CRJP) is a prime example of positive collaboration. Cartier is one of the founder members of the Council, a voluntary initiative bringing together representatives from all areas of the diamond and gold supply chains to promote responsible business practice.

Established in May 2005, it has grown from 14 founder members to over 80 members in under five years. A number of our other Maisons are now also members, including Van Cleef & Arpels, Piaget, Jaeger-LeCoultre, Montblanc and Baume & Mercier. Since its launch, the CRJP has had significant achievements including creating an 18 point CRJP Principles and devising a detailed Responsible Practices Framework in consultation with stakeholder groups. The framework deals with aspects as varied as money laundering, working with hazardous substances and product and packaging design. All CRJP members agree to apply the framework as a condition of membership.

This year sees the introduction of a third-party monitoring system for CRJP members. The system has been developed in consultation with members and will encompass self-assessments followed by independent monitoring by third-parties.

As part of its continuous dialogue with stakeholders within the industry, the CRJP held a stakeholder meeting in May 2007. This was attended by nearly 20 organisations including NGOs and representatives from the industry.

Case Study: Alfred Dunhill and Piaget training on ethical sourcing

Ensuring that front-line sales staff are aware of Richemont’s stance on the ethical sourcing of raw materials and are able to confidently respond to customers’ questions on these issues is paramount. To address this, Alfred Dunhill has incorporated specific training on ethical sourcing into their company training brochures, one of which is available for each category of product sold. Training brochures cover the key ethical issues associated with the supply of raw materials particular to that product, for example exotic leather, conflict-free diamonds and responsible gold sourcing. Alfred Dunhill developed a CD Rom specifically on the issue of sourcing conflict free diamonds and this was distributed to Alfred Dunhill branches globally.

Piaget conducted a ‘mystery shopper’ exercise in 2007 to assess how well its retail staff responded to questions about the origin of diamonds used in their products.