Greg Valerio Interviews Michael Rae, CEO of the Responsible Jewellery Council.
“The truth slips out” – I.F. Stone
Introduction:
As Blood Diamonds and Dirty Gold were hitting the mainstream press, The Responsible Jewellery Council (formerly the The Council for Responsible Jewellery Practices) was founded in 2005 by a group of fourteen large companies and trade groups in the jewellery sector, including: Jewellers of America (USA), Tiffany, Zales, National Association of Goldsmiths (UK), Newmont, Cartier, Rosie Blue, De Beers, BHP Billiton, Rio Tinto.
The top bar of their website currently reads: “Reinforcing confidence in the diamond and gold supply chain.” The members in group adhere to: “responsible ethical, human rights, social and environmental practices in a transparent and accountable manner…”
Greg Valerio(GV) interviewed Michael Ray(MR), the CEO of RJC, earlier this year. Valerio is one of the founding board members of the Alliance of Responsible Mining (ARM) and the director Cred Jewellery, UK. He is widely regarded as an activist and expert in international fair trade jewellery issues.
Valerio pressed Rae for details regarding RJC purpose and methodology. Rae made statements that cast doubt on the stated RJC mission. Among them, this exchange stands out:
GV: I was in Peru in 2007, witnessing children who were using mercury to extract gold that was being sold through a series of traders, ending up in the supply chain that found its way into the European and US market. So how is RJC going to stop that from happening?
MR: Well frankly we won’t, because it’s not something that we are saying we are doing… We are not saying we are giving you something out of a RJC certified supply chain.
Read the full, unabridged interview below.
~Marc Choyt, Publisher Fairjewelry.org
GV: What is the Responsible Jewellery Council?
MR: The RJC Organisation is establishing an independent third party system of certification through verification through independent third party auditors of performance of the various companies in the supply chain of gold and diamonds through to retailers of jewellery.
GV: Michael, there is a huge amount of jargon in that statement. Can you repeat it in layman’s terms so the average jeweller can understand?
MR: Consumers are increasingly concerned about what is behind the goods and services they are buying. They want to know they are buying from a reputable person, and that the person is buying from reputable persons, back along the supply chain.
At the moment there is no system for any manufacture in the jewellery industry that looks at the entire supply chain and ensures that there is appropriate and good performance on ethical social and environmental grounds. That is what the council is trying to do.
The standards apply in every link in the chain. Then we ensure that people and companies in that chain are behaving responsibly– determining this not through their own say-so, but through RJC accredited auditors who can measure performance against the Councils standard.
GV: So when you say it is the only system, how do you account for the ARM/FLO Fair Trade standard and process?
MR: What I am talking about, is certainly not to decry any of those initiatives nor other systems…
GV: But is that not another system that is doing the same thing as RJC?
MR: No, because they are looking at the particular material and is it sourced well. And then as the work is going on they then will have the chain of custody follow the material. So if you are buying ARM gold, what you have is good ARM gold, but it does not say anything about the practices of the jewellery manufacturer.
So what I am contrasting here is what we are doing and what is going on with a system like the Marine Stewardship Council (MSC), Forestry Stewardship Council (FSC) or ARM. They are looking at the nature of the source of the material; is the material being produced well at the source.
To move aside from jewellery, if you look at a FSC table in a high street store in the UK you know; through the FSC system, that the timber comes from a well-managed forest.
So the raw material is coming from a good source. You know that socially, environmentally, again it is well managed at source. But it is silent as to the working conditions and the environmental conditions in the furniture factory that makes the table.
GV: There is a question that I wish to ask in regards to the certification. You talk about certification, and you talk about third party certification, but having reviewed your documentation, I would like to know, is your certification a consumer label, or is it a label applied to membership of the RJC?
MR: It is applied to the member companies of the RJC. It is distinctly something that is not a swing tag, like the FSC label
GV: So it is fair to say that RJC certification is not a consumer label?
MR: Indeed.
GV: You also talk about third party certification and talk about third party verification. What is the difference?
MR: What we have is a system where the performance against the standard is verified by an auditor, although this is yet to happen as we have no accredited auditors yet. So when the system becomes operational, RJC members will receive a list of accredited auditors.
We are in the final stages of producing the accreditation conditions. We will be sending out to the audit firms, inviting them to become accredited.
Once that happens members will be able to go to that list of the accredited third party auditors and they recruit one of those auditors. The accreditation process rests on the professional qualifications of that audit company. There will be a pool of accredited auditors who are deemed to be, fit for purpose.
They would then come to the retail operation or the diamond cutting and polishing workshop and look at the activities of the firm as against the requirements of the RJC system. They would then give you, the owner of the business a full report as to what they have found and whether you are in conformance and assuming you are in conformance with the RJC system.
The auditor is then required to make a recommendation to the RJC as to whether or not you should be certified.
GV: Let me ask a question about the auditors. Who accredits the auditor?
MR: We the RJC do that on the basis of a standard as to the necessary experience and probity of the auditors.
GV: So the RJC accredits the auditors, and who sets the standard?
MR: The standards are drawn from a variety of places– from existing international standards for the standards for the accreditation of auditors. We have not made up the rule as we have gone along. We have looked at what is the basis for the accreditation process of a whole host of other certification system that are out there.
GV: Can you give me an example of some of those?
MR: Yes, we looked at the accreditation system for the Forestry Stewardship Council, The Marine Stewardship Council and the various corporate social responsibility non-financial auditor systems that exist around the world.
GV: So these standards (Marine Stewardship Council) — you talk about are not actually RJC standards, they are other standards that you have drawn in and relabelled?
MR: Yes, unashamedly. We have cribbed other people’s homework and the documentation that will go out to the audit community. When we publish this material within the next month, hopefully, will be of no surprise to the audit community.
GV: So you are accrediting your auditors and setting your standards from other sources?
MR: Look, here is a system against which our members wish to be audited. So if you wish to make a ‘buck’ out of being an auditor, then contact us and apply to get accredited to this system.
GV: So how much is it going to cost the average small jeweller to do this?
MR: That’s the issue that we do not know yet. We do not have a clear understanding on how much this is going to cost, as that depends on the nature of the accreditation process. So I am afraid it is premature for me to give you a figure now.
GV: When I reviewed your material, I noted there is an awful lot of overly complex documentation and information that, for me as a small jeweller, I would have to assimilate, understand and process in order to get to the heart of the system. In the UK and the USA over 60% of the market is still the small independent jeweller. How are you going to offer assistance to a small jewellery company? Why should they join an overly bureaucratic system like this one?
MR: Well I do not agree that it is overly bureaucratic. The reason being is we have deliberately structured the system for the auditors to be explicitly able to take into account the appropriate system that needs to be in place for the small jeweller, over and above what would be required for a company such as Tiffany & Co.
The information needed is commensurate with the scale of the company they are auditing. So while I agree the documentation is daunting for someone who is unfamiliar with the jargon of the auditing and CSR agenda, the auditors are expressly directed within that system to look for performances and systems commensurate with the scale of the company.
There is a dialogue going on at the moment between the RJC and its trade association members to work out precisely through our trade association members how to provide benefits and economies of scale to the small and medium size users. This has been done in other certification schemes and we do not see why we cannot do it as well.
So what we are looking at for retail jewellers is a variation of the FSC (Forestry Stewardship Council) scheme so that a small number of wood lot owners can club together, so a number of small retail jewellers could club together, and be certified as a group.
GV: I note in your certification handbook that members are asked to do their own self-assessment before bringing in an auditor. When I read that I got the impression that if I was a member of RJC, I could define the scope of my own certification.
MR: No definitely not, we say it is worth doing a self-assessment in the first place, as it will save you money in the long term. If you have your affairs in order according to the questions that the auditor is going to ask you so you are in conformance with the RJC system. If you have done your homework before the auditor turns up, it will make their life easier and their billable hours less. So that is the benefit of the self-assessment.
GV: Moving onto another issue: the transparency of product. If we use gold as an example, if I am buying gold that is coming out of an RJC certified operation are you able to give me the GPS location where that gold originated?
MR: No, because we are not saying we are giving you something out of a RJC certified supply chain.
GV: So this is not certification on the supply chain?
MR: No, what we are doing is certifying the performance of the links in the supply chain. We are not certifying the stuff that is moving through the chain.
GV: I was in Peru in 2007, witnessing children who were using mercury to extract gold that was being sold through a series of traders, ending up in the supply chain that found its way into the European and US market. So how is RJC going to stop that from happening?
MR: Well, frankly, we won’t, because it’s not something that we are saying we are doing.
What our system will do is allow individual businesses in the supply chain to demonstrate that they are bonafide. So when you as a retailer say you are selling a gold and diamond ring, it is a gold and diamond ring.
Also, you are not mistreating your staff and you are running a reputable business. It does ask you to be in discussions with your suppliers about these issues, but our capacity as the RJC to direct you, for example, to only deal with RJC members– we can’t do that, as we will fall foul of anti trust laws the length and breadth of the world.
So we cannot insist that our member only trade with other members. But should they determine to do that of their own volition. Companies are fully at liberty to do that.
So as you know, the home retail group Argos has circulated to their suppliers that they must be a RJC member. BHP Billiton have flagged that they will only sell diamonds to RJC members once the RJC system is up and running.
But I stress these are decision made by the individual companies.
GV: Aren’t you guys just in direct competition with CBIJO?
MR: Very different roles Greg, our role is solely fixed on the development and publishing of a system of independent third party certification of social, environmental and business ethics and performance. We take our standards from institutions like CIBJO, around for example the Blue Book, or the World Diamond Council and they guide us on the technical nature of what the description of gold or the description of diamonds.
GV: And would you be looking for CBIJO to join the RJC, or would RJC be looking to join CBIJO?
MR: We have been a member of CBIJO and they have been a member of ours, as you will remember at the NGO meeting in Antwerp in 2005 where a press release was issued by CBIJO condemning the RJC (formally CRJP). At that point, CBIJO left the RJC. CBIJO at that point had been a founding member of RJC, which was very unfortunate at the time.
Since then we joined CBIJO as an associate member, but now because of the financial difficulties we all find ourselves in, the executive of RJC have taken the decision that this is not a high priority at the time so we have not renewed our membership this year. We continue to work closely with them. We inform them of our activities. They keep us informed of their activities.
GV: So would it be an ambition of RJC to rejoin CBIJO at some point?
MR: Certainly, if the financial circumstances improve then we would do that. We have very distinctly different roles and ours is focused on the third party certification and verification system.
GV: I would like to return to an earlier point you made about RJC member companies only trading with other RJC members. If I was a manufacturer, supplier or a wholesaler and all of a sudden an Argos or BHP Billiton say ‘unless you join RJC we will no longer sell or buy from you’, that sounds like a strong arm to shoe-horn people into the RJC system.
MR: This is the only way that an individual company can use the RJC system in terms of supply chain management. The option is there for companies that want to do it and whether or not many will do, remains to be seen.
GV: How does the fair trade movement get around this point?
MR: Well, they don’t because you volunteer to buy the stuff.
GV: So this is voluntary basis only.
MR: Let me offer an example. The ‘Love Earth’ range of jewellery that Walmart launched last year, they have a chain of custody and every member of that supply chain is an RJC member. So were they to persist in that set of business to business links and every link in the chain is an RJC member, it would be possible to say that they can have a chain of custody audit.
GV: In your literature you talk about providing consumer confidence in the gold and diamond jewellery supply chain, yet given the fact that you have said you can’t cover child labour in the supply chain, how can you provide consumer confidence in the supply chain when you have no transparency in your supply chain?
MR: The issue is around what firms we have involved in the process and how many, and what sort of proportion we have from the industry as members. And that ‘aided and abetted’ by what those individual members do in regards to this kind of issue in their supply chains. Certainly our intentions, and they are quite large–we think we have a product that is valuable to the gold and diamond industry and we are very hopeful that as that product becomes established and better known more and more groups will join…
GV: Are you saying that you want to dominate the jewellery supply chain?
MR: No not at all, but if we have an attractive product to the industry and we hope that more than not would join RJC and be certified and as a result we are capable of reinforcing consumer confidence– that we do have people that are living the standards of the Council in terms of the social and environmental specifics.
In the short term, we do believe that certification under our system does allow our members to differentiate themselves from those who are not certified under our system and that applies wherever they are in the supply chain. Anybody who has been through this process can be quite proud of the fact that they have been audited by an independent auditor who says they are fulfilling the social and environmental standards that are set down by the council.
GV: I want to move onto the structure of RJC. Who is on your board?
MR: On our website we have representation from the companies that founded the organisation.
GV: And who are they?
MR: Jewelers of America (USA), National Association of Goldsmiths (UK), Newmont, Cartier, Rosie Blue, De Beers, BHP Billiton, Rio Tinto and many more. Also we have representation that has been elected from the different member forums that make up the councils membership from the different categories like mining, trading, cutting and polishing, gold refining, jewellery manufacture and retail.
GV: So all these different sectors sit on the board?
MR: Yes they sit on the board and each year there is an election for those elected members. Typically with any start up institution and within our M&A’s (memorandums and articles of association). The founders will be there for the first 10 years of operations. Half of them will go after 5 years and this is to ensure continuity for the establishment of the organisation, but after 10 years the board will be totally elected from within its membership base. We have representation from the list of founders that I gave you earlier and from trade associations.
GV: In regards to this process, is it a multi-stakeholder process that includes civil society groups like NGO’s and government bodies on the board, or is it a multi sector operation?
MR: It is purely a multi-sector organisation. A product stewardship group is how we view ourselves. It has much more in common with a trade association than with any other entity. It membership is made up of companies and individuals who are participants in the gold and diamond jewellery supply chain, and our governance is by those members.
The board is not solely representative of large companies, for example Vicky Cunningham is a member of the board and she runs a small jewellery company in Tulsa Oklahoma and was elected by the retail members to represent their interests on the board, so we have quite a disparate range of companies from the very large like Signet Group through to the small companies like Vicky’s. But certainly the organisation as we describe it is a product stewardship association.
GV: It strikes me that the impression the RJC gives is one of a big boy’s club who have got together to create a system that will act as a CSR initiative designed to screen out any problems that exist. How would you respond to that?
MR: What do mean by problems?
GV: For example, I emailed one of your members because my company has its own quality assurance programme. I was making a number of enquiries about the diamond supply chain, particularly their cutting and polishing. When I asked them to give me the information regarding their standards on cutting and polishing, they refused to do that. The only assurance they were prepared to give me was ‘It will be compliant with the RJC standards when they are released.’
To my mind, that is not being transparent. That is avoiding a direct question and using RJC as a cover.
MR: Well I think the issue will be for a person in your position wanting to build a business relationship with a member of the Council, that once the system is operational and a firm has been audited, you will have assurance through the work of the accredited auditor that that company is meeting the standards that the Council has set.
GV: But this is a big problem that many retailers will have. If I ask a direct question of one of my suppliers like, ‘What are your standards in cutting and polishing?’—They tell you that they will not give you that information because it is confidential and has been put together by their auditor…. we have spent lots of money on it, but we are members of RJC and we have been accredited by RJC through their auditors so you can take their word for it.
That to me seems like an unwillingness to disclose information and a lack of transparency on behalf of that company.
MR: Well I think there are two issues here. Firstly, our RJC standards of transparency, you will know what they are. We are not asking you to believe that it will be alright on the night. We do tell you what the RJC standards are and what the auditors are looking for.
It’s there in the RJC code of practice and in our guidance for the auditors. These are public documents and they always will be they are not going to disappear into a black box…
GV: Michael, you are not answering my question. Why does your member company not just disclose what their standard is, rather than hide behind RJC?
MR: But that is my issue. My issue is what is the Council’s standard, and what will our members be called to do by the auditor that comes to inspect them who is accredited by the Council?
You can ask them for their standards as a customer of theirs, but there is nothing that I can do or the Council can do to make them give you what they deem to be their private and confidential information. Certainly, though, what I can tell you is the standards that the council will hold them to.
GV: But will you as the Council, ask them to disclose their internal standards?
MR: No, it is not. What we will require them to do is to conform to our standard and hopefully they will find it beneficial and to their financial advantage.
GV: But what I find interesting is that this particular RJC member refused to disclose their internal standards, which they claimed were put together by an external company and hid behind RJC futures standards that have not been published yet.
MR: That is something that they can do. Whether you find that adequate in the current circumstances, given that our system is yet to be applied, is an issue for the retailer, I would argue. They can say we intend to be fully compliant with the RJC system, but that is a statement of fact as to their intent. It is not a fact that they are compliant. The real issue for us is are they certified and meeting our RJC standards.
GV: But I think that leaves the RJC open to the accusation that they will cover everyone’s ethical performance.
MR: Yes, as long as their ethical performance stands up to the third party independent verification. That’s the issue. If they do not meet that standard, then the discipline procedures will come into play leading to the expulsion of that company.
GV: Are you saying that if a large-scale mining company like Rio Tinto, who was a founding member of RJC, failed to meet the standards in the mining supplement, you would throw them out?
MR: Yes, we would have to. The organisation would have no credibility unless there is a consequence to failing to conform with the standards that are set down. And like any other similar sort of system, we talk about critical breaches needing to be brought to our attention and can result in expulsion.
GV: But if Rio Tinto, to use them as an illustration, is as a founding board member of RJC, in a critical breach of the standard, what incentive would there be for them to kick themselves out?
MR: They wouldn’t, and our governance is such that if there was a question about the continues membership of a company, that is in breach does not vote on whether they should be thrown out of the Council. In fact, neither do any of that companies competitors. Clearly no system would have credibility if the competitors of a company are given the right to vote on the expulsion of one of their competitors.
GV: But surely if you are only a multi sector organisation, then everyone in that sector is a competitor to one degree or another.
MR: Not really, as although they will all be buying off each other in one form or another. There is a difference between retailers, cutter & polishers sitting in judgement over miners or the other way round.
Look, we do not want Tiffany & Co sitting in judgement over Cartier, who are direct competitors, anymore than you would want BHP Billiton passing judgement on Rio Tinto.
GV: But if you are a trade association on that level, how can retailer pass judgement on a diamond supply company when they are one of the principle suppliers? There is no incentive for them to do that.
MR: Well, that is going to be the test of our system. Clearly, if we have got examples of auditors coming to us telling us horrendous tales about what is going in a particular situation and we do not expel that person then there will be no value in what we are doing.
GV: So why did you not elect for a multi stakeholder process then?
MR: The organisation at its establishment was engaged in something that was totally new. The founders thought what we want to do is put standards together for every aspect of what we do in the supply chain. There is no other equivalent in any other product group in the world.
GV: I still do not understand why it is not a multi stakeholder process?
MR: Well, they decided they wanted to get this thing done and deliver a product to market and they decided that the best governance model was a product stewardship model that was structured as a trade association. There have been attempts to consult with others, the standards have been drawn together from a wide variety of sources and processes that are multi-stakeholder like ILO. We have, as I have said, unashamedly cribbed our homework from others who have done good work in their respective fields.
GV: Are you saying you are relying on other people’s multi stakeholder credentials to boost your credentials?
MR: No, not at all. What I am saying is that there are standards we have adopted that have come out of multi-stakeholder processes. The methodology that we have used is in essence a trade association with a product stewardship focus.
