Context

The responsible procurement of industry-specific raw materials such as gold, diamonds, leather, exotic skins and precious stones is a priority for the Group. Historically, for the luxury goods industry, there have been issues surrounding the sourcing of gold and diamonds, which include conflict, e.g. social & human rights as well as environmental issues, as these are often mined in regions affected by conflict or instability. Accordingly, all key materials are included in the scope of the CSR 2020 Plan: gold, diamonds, leather, exotic skins and precious stones.

 

Our approach

Our long-term goal is the traceability of all raw materials used in our products. We understand many of the challenges associated with achieving traceability and are working closely with our suppliers and industry partners towards that goal.

Our Supplier Code of Conduct sets out our position on the following issues. The issues stem from our analysis of risks in our ‘upstream’ supply chain, in particular raw materials.

 

Responsible gold sourcing

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

We continue to work closely with the Responsible Jewellery Council (`RJC´) to help improve the gold supply chain. In addition to this industry-wide approach, we work with our gold suppliers to strengthen the inclusion of ethical criteria at all levels of our gold sourcing supply chain. Membership of the RJC promotes a robust approach to these supply chain issues for our Maisons and other businesses in the jewellery industry, from mines to retail. A number of our Maisons’ representatives occupy seats in the RJC’s governing bodies, including its Board of Directors and its Committees. Moreover, we have taken note of the critical comments, made by certain civil society representatives during the year, directed towards the RJC’s governing arrangements. We also note that the RJC reviews not only its standards but also itself in the light of evolving best practices. Accordingly, we work with the RJC on any recommendations it makes to its 1’100 members regarding the composition of its Board and other governing bodies.

Our ambition is 100% certified gold. The RJC’s certification standards are favoured as they provide flexibility on the origin of gold, including recycled gold, and build trust in the supply chain itself. The great majority of gold delivered to our operations is both recycled and certified. We expect the proportion to remain stable in the near-term, but to rise towards 100% in the longer term. When we have reached our goal of 100% CoC certified gold, which may take more than three years, then our Maisons will consider related product claims.

In parallel, through Cartier’s direct participation in the Swiss Better Gold Association (‘SBGA’), which seeks to support Artisanal and Small-scale Mining (‘ASM’) development towards responsible mining, facilitate ASM access to the international market and financing and encourage progress toward better social and environmental conditions. The SBGA brings such mines within reach of RJC, Fairmined and Fairtrade International certifications, thus improving local livelihoods and the environment around the mine.

Lastly, the role of responsible large-scale gold mining is being addressed through the RJC’s revised standards. The new Chain of Custody standard, may be applied to a specific large-scale mine, or a restricted number of equivalent certifications may be recognised. In all such cases, the role of independent auditors remains critical to safeguarding the supply chain’s good reputation.

 

Conflict-free diamonds

Richemont is 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. Since 2003, the international trade in rough diamonds has been governed by the Kimberley Process Certification Scheme which requires all rough diamond exports and imports of participating countries to be documented, uniquely certified and approved via a government bureau, in order to put an end to the trade in conflict diamonds.

All diamonds purchased by Group companies are Kimberley Process compliant. We require our suppliers to comply with the ‘System of Warranties’, a continuation of the Kimberley Process Certification Scheme which also applies to polished diamonds. This is a voluntary system, created by The World Diamond Council, and relies on the creation of a chain of written warranties - from original Kimberley Process certificates through to invoice - of all transactions involving the purchase and sale of diamonds, their cutting and polishing. Compliance is closely monitored.

During the year, the Diamond Producers Association enlarged its own public reporting. Its website now includes the latest sustainability reports of its members, together representing the overwhelming majority of worldwide diamond mining operations.

 

Mitigating risks stemming from synthetic diamonds

Many of our Maisons’ watches, jewellery pieces and writing instruments are set with diamonds. Historically, we have taken steps to ensure the integrity of those naturally-occurring stones through the use of certifications, testing equipment, process controls and customer warranties. An international standard (ISO 18323) defines naturally-occurring diamonds.

More recently, synthetic or laboratory-grown diamonds have been developed for the retail market using technological innovations. The producers of those synthetic diamonds, including companies historically associated with naturally-occurring diamonds, have deployed communication tools to widen their appeal among potential customers.

Our policy is to neither buy nor sell synthetic diamonds. In line with of that policy, the Group has taken further technical steps to ensure that no mixing of the two types – naturally-occurring diamonds and synthetic diamonds - takes place: neither in its supply chain, nor in its own operations. We believe that this position is aligned with our ultimate customers’ expectations regarding accuracy and transparency, and with all applicable laws linked to consumer protection rights.

 

Coloured gemstones

As part of a multi-stakeholder working group, the Jewellery Maisons Cartier and Van Cleef & Arpels have actively contributed to the RJC's first coloured gemstones standard, scheduled for publication during the current year.

 

Trade in Protected Species and Animal Welfare

We require suppliers to comply with international and local legislation, e.g. the Convention on International Trade of Endangered Species (‘CITES’). That international convention protects biodiversity around the world.

We also pay attention to other international and local fish and wildlife regulations. Moreover, an internal list is being constructed to support our Maisons in either contentious materials or instances when prior authorisation may be required in certain markets.

 

Leather and ‘fur’

The growing importance of leather goods, both for the Group’s Maisons and for the luxury industry in general, has focused attention on responsible leather sourcing initiatives. Richemont’s sales of leather goods in the year amounted to € 780 million or 7% of turnover. Replacement watch straps are not included in that figure, but do not have a material impact on the percentage of sales.

Through Cartier, Richemont participates in the advancement of responsible and transparent supply chains of reptile skins from Southeast Asia through The Southeast Asia Reptile Conservation Alliance (‘SARCA’), which seeks to drive improvements in the trade’s operating environment by maintaining wild reptile populations, supporting local and national economies and promoting animal welfare principles.

Richemont has undertaken a mapping of its leather goods supply chain to better understand the strengths and weaknesses it represents, and to take action to mitigate risks where they have been identified. In due course, a responsible leather sourcing policy may be established to clarify areas of uncertainty, such as ‘fur’. A number of our Maisons, including Cartier, Chloé, Montblanc, Peter Millar and Purdey have chosen to stop buying or selling ‘fur’.

 

Animal testing

Neither Richemont nor its Maisons conduct any testing of its products on animals. Our Maisons have policies for fragrances and cosmetic products, animal testing and product information and labelling.

Cartier Parfums does not perform any tests on animals for its fragrances. 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 European Regulation.

Van Cleef & Arpels, Montblanc, Alfred Dunhill, Chloé and Maison Alaïa 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.

 

Chemical Competence Centre

During the year under review, Richemont established a Chemical Competence Centre in Switzerland. The Centre was envisaged during the development of the CSR 2020 Plan. The Centre seeks to ensure full compliance with chemical regulations and Richemont’s Product Restricted Substance List (‘PRSL’), thereby securing continuous product-access to worldwide markets.

The Centre maps the Group’s chemical compliance challenges, and coordinates signatories of the Supplier Chemical Compliance Commitment (‘SCCC’). The SCCC follows the approach of Richemont’s Supplier Code of Conduct and, due to evolving chemical and data-related matters, it must be re-signed by applicable suppliers at least once every two years.