The period from September through to January sees a number of important holidays for many countries and these holidays represent the peak season for gift giving. Many people’s thoughts often turn to luxury items such as jewelry as well as to electronic items such as mobile phones, MP3 players and the like. But what do these items have in common? The use of precious metals and materials, some of which may originate from conflict areas and all of which require intensive processing and manual labor in their production. Moreover, the high value and ease of trade of many of these items has also increased the risk of them being used for money laundering and potentially the financing of other criminal activities such as the financing of terrorism.
Sustainable Initiatives in the Sector
This has brought the industry and many of the brands in this sector into the spotlight and generated concern among interested stakeholders including legislators. But individual groups and the industries concerned have responded with a number of initiatives to respond to the challenges and to show how responsibility can be assured. These include schemes giving assurance over the traceability and origins of the raw materials as well as the responsible production of the final products and incorporate existing initiatives and best practices in the process.
For jewelry including diamonds, gold, silver and platinum the Responsible Jewelry Council (RJC) Code of Practice encompasses a wide range of environmental, social, human rights and business ethics standards in the diamonds and precious metals supply chain. RJC members are required to commit to upholding this Code and to be certified within 2 years of joining with certification achieved through independent, third-party audits by auditors formally accredited by RJC.
The Code takes into account many aspects of legislation and best practices in areas such as Anti-Corruption, Anti-Money laundering and the like as well as initiatives such as the Kimberley Process and World Diamond Council System of Warranties and OECD Guidance for Multinational Enterprises.
More recently, the US Dodd-Frank Wall Street Reform and Consumer Protection Act has come into force, incorporating requirements for companies to report annually on whether any Conflict Minerals (defined as “3 Ts” - tin, tantalum and tungsten plus gold originating in the Democratic Republic of Congo or an adjoining country) are necessary to the functionality or production of a product manufactured or contracted to be manufactured by the company. The final rules for this have just been published and require companies to have due diligence systems in place to support their annual reporting.
Steps to Ensure Due Diligence
Many of these minerals are used in the electronics sector as well as in jewelry and the Electronics Industry Citizenship Coalition (EICC) has developed a Certified Smelter program to provide assurance at the smelters/refineries which are the key point of due diligence in the supply chains. By sourcing raw materials from such certified smelters companies will be able to report reliably as required.
The RJC has also published a Chain of Custody certification to provide assurance on the origins of gold and members’ due diligence systems. This is directed at all stages in the supply chain so that in addition to sourcing from certified refiners members can also have their own systems certified providing traceability from finished product to raw materials. Meanwhile the London Bullion Market Association (LBMA) has launched its LBMA Responsible Gold system aimed at ensuring assurance in the systems implemented by gold refiners. While this may sound like another case of Code Inflation, these organizations are working together on harmonization of industry initiatives so as to reduce the burden of multiple audits and give a more seamless approach to assurance.
SGS is accredited by both RJC and EICC for their programs and is actively involved in these initiatives. With more than 400 auditors with social accountability expertise and an extensive knowledge of all major codes of conduct, SGS is a partner of choice for social audits and training. We are also committed to supporting new initiatives and developing services to assist companies on their sustainability journey.
SGS United Kingdom Ltd.
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SGS is the world’s leading inspection, verification, testing and certification company. SGS is recognized as the global benchmark for quality and integrity. With more than 70,000 employees, SGS operates a network of over 1,350 offices and laboratories around the world.