The dynamics of Corporate

Social Responsibility in
challenging times with a
focus on Human Rights
By Iris Van der Veken
Manager Corporate Affairs Global
Chair of UN Global Compact Network Belgium

11th May 2010

KAURI Workshop on Human Rights
 AGENDA
• Some background information about the
diamond industry
•About Rosy Blue
•Our CSR Business Model
•Challenges ahead
•Q&A

2
BACKGROUND INFORMATION
DIAMOND INDUSTRY

3
 Taking a responsible stand in
increasingly challenging times
• Complex Supply Chain from mining to retail
• Protecting the integrity of the supply chain is a priority
• What is the future of beneficiation?
• Yes, the industry has had major issues and still has issues, like
any other industry.
• The key question is: What are we doing about it?

4
 Taking a responsible stand in
increasingly challenging times
Conflict Diamonds: 1990’s in Sierra Leone and the Democratic Republic of
the Congo

• Zero Tolerance Policy towards diamonds

• Close Cooperation with the UN, Governments and NGO’s to create the
Kimberley Process Certification
• System was formally adapted in 2003
• KP members account for approximately 99,8% of the global production
of rough diamonds
• The System of Warranties was developed by the World Diamond Council
to extend the Kimberley Process conflict free assurance of polished
diamonds

5
 Key Initiatives

Mining Export Import Polishing Manufacturing Retail

Kimberley Process
System of Warranties
Certification

Source: www.diamondfacts.org

6
 Taking a responsible stand in
increasingly challenging times
What is the status today?

• Venezuela has voluntarily suspended exports and imports of rough

diamonds until further notice
• Cote d’Ivoire is currently under UN sanctions and is not trading in rough
diamonds
• Marange Diamonds

7
 Initiative of the Responsible Jewellery
Council
• May 2005, 14 organizations from diamond and gold jewellery business came
together to form the Council for Responsible Jewellery Practices.

• At present, the Responsible Jewellery Council is an international not-for-profit

organization, bringing together 200 members out of the jewellery supply chain
across the globe.

• Purpose: striving to promote responsible, ethical, human rights and social and -
environmental practices in a transparent and accountable manner throughout
the supply chain to reinforce the consumer’s and stakeholder’s trust in
responsible products.

• Certification System, based on compliance with the principles of the UN Global

Compact, but specifically for the diamond and gold jewellery supply chain.

8
RJC Membership

9
HOW ROSY BLUE ANTICIPATES AND
IS COMMITTED TO TAKE A
LEADERSHIP POSITION IN CSR BEST
PRACTICES

10
Rosy Blue in the diamond supply chain
Global sales 2008 $1,8bn

11
Our global presence - 14 countries

Russia
Belgium
Luxembourg
USA Armenia China
Japan
Israel
India
Hong
UAE Kong
Thailand

Sri Lanka

South
Africa

12
Employment to 10,000 people

13
 Our Stakeholders

Business Financial Local

Employees
partners institutions communities

Building trust
Industry
institutions with our Customers

Stakeholders
Trade
Auditors Media Governments
associations

14
Our Suppliers

15
OUR APPROACH TO CSR

16
 Core Values
ACCOUNTABILITY

DIVERSITY INTEGRITY

17
 Family Philosophy

Truth Education Conservation Valor

Equal rights
Ahinsha Female
participation
(non-violence) & integration

Compassion Child care Healthcare Religion

18
19
20
21
 Within every change there is an
opportunity for dynamics
• CRITICAL consumers
• Diamonds are an ever lasting symbol of
LOVE – EMOTIONS – TRUST
• It provides store of VALUE
• CONTINUED CONSUMER CONFIDENCE in our products
is essential
• It’s all about doing things RIGHT!

22
 Diamonds and intangible value
• Our today’s ACTIONS will BUILD tomorrow
• The Industry has EVOLVED in the last decade
• CONFLICT DIAMONDS – that inflicted human pain – 180
degrees turn around – ongoing continuous investment to improve
practices
• The Industry can take PRIDE in its ACHIEVEMENTS
• At a very early stage RB REVIEWED
all our business activities and processes.
• Today: throughout the supply chain we are adopting MODERN
ETHICAL STANDARDS

23
JUNE 18TH WE PRESENT
OUR SECOND CSR REPORT

WWW.ROSYBLUE.COM

24
 Rosy Blue Commitment

N CE ON
E Voluntary Initiatives GO
I D IN
O NF G
C CO
E R M
M M
S U National Laws and Regulations ITM
O N EN
C T
International Laws and Regulations
Kimberley Process & System of Warranties
General CSR Initiatives Industry wide Initiatives Proprietary Corporate
Initiatives
• UN Global Compact • Responsible Jewellery
Council • Rosy Blue Internal CSR Model
• Best Practice Principles
• Business Excellence Model
• Wal-Mart

25
 Key Initiatives

Business Social
responsibilities responsibilities

Environmental Product
responsibilities integrity

26
 Key Initiatives
• De Beers Best Practice Principles
• Rio Tinto Business Excellence Model
• Wal-Mart
• Responsible Jewelry Council
• United Nations Global Compact
• Rosy Blue Compliance model

27
 United Nations Global Compact

2008 ROSY BLUE SIGNS

UN GLOBAL COMPACT

Signifying our COMMITMENT to operate in

RESPONSIBLE and SUSTAINABLE manner

28
 United Nations Global Compact
What is the United Nations Global Compact?

The United Nations Global Compact is the WORLD’S LARGEST

VOLUNTARY CORPORATE CITIZENSHIP INITIATIVE which is

committed to aligning the operations and strategies for all type of

organizations with the UNIVERSALLY ACCEPTED PRINCIPLES of the

UN covering HUMAN RIGHTS, ENVIRONMENTAL PROTECTION,

LABOUR STANDARDS AND ANTI-CORRUPTION.

29
United Nations Global Compact
Human rights
Principle 1: Businesses should support and respect the protection of internationally proclaimed
human rights, and
Principle 2: Businesses should make sure they are not complicit in human rights abuses.
Labour standards
Principle 3: Businesses should uphold the freedom of association and the effective recognition
of the right to collective bargaining;
Principle 4: Businesses should uphold the elimination of all forms of forced and compulsory
labour;
Principle 5: Businesses should uphold the effective abolition of child labour; and
Principle 6: Businesses should uphold the elimination of discrimination in respect of
employment and occupation.
Environment
Principle 7: Businesses should support a precautionary approach to environmental challenges;
Principle 8: Businesses should undertake initiatives to promote greater environmental
responsibility; and
Principle 9: Businesses should encourage the development and diffusion of environmentally
friendly technologies.
Anti-corruption
Principle 10: Businesses should work against corruption in all its forms, including extortion and
bribery.

30
 United Nations Global Compact
ACTIONS:
• JUNE 2008: ROSY BLUE SIGNED THE UN GLOBAL COMPACT
• December 10th 2008: Rosy Blue supports the
60TH ANNIVERSARY OF THE UNIVERSAL
DECLARATION OF HUMAN RIGHTS
• April 29th 2009: 2008 CSR Report is SUBMITTED as COP
(Communication on Progress) on the UN Global Compact site
• May 1st 2009: RECOGNIZED as COP

31
 United Nations Global Compact
ACTIONS:
• OCT 2009 TO NOW: Active participation with UN Global
Compact in New York on exchanging knowledge
– Rosy Blue case on the Leaders Summit
• SINCE FEBR 2009: Member of the Human Rights Working
Group/ Chair of the UN Global Compact Network Belgium
• JUNE 2010: Leaders Summit in New York

32
 Key Milestones of our CSR Journey
Oct 2007: CSR STRATEGY DECISION by the CEO and Group Associates
Establishment of the
GLOBAL CORPORATE AFFAIRS DEPARTMENT
Dec 2007: INTERNAL CSR SYSTEM in place
(planning program, content-supporting standard documentations)
Seminar in Sri Lanka: system training for the appointed local
dedicated CSR-AML COMPLIANCE OFFICERS.
Jan 2008: CSR INFORMATION MANAGEMENT SYSTEM goes live.
Start ON-SITE INTERNAL PRE-AUDIT VISITS.
Jan-Apr 2008: Implementation of CSR system according to STRICT TIMELINE.
Apr- Jun 2008: INTERNAL DOCUMENTATION REVIEW.
Jun 2008: Participant of the UN GLOBAL COMPACT.
May 2009: FIRST ROSY BLUE GROUP CSR REPORT.

33
 Key Milestones of our CSR Journey
Dec 2009: Pilot Project RESPONSIBLE JEWELLERY COUNCIL

Jan 2010: Member of the SUPPLY CHAIN MANAGEMENT WORK GROUP

headed by UMICORE

Febr 2010: Member of the HUMAN RIGHTS WORKING GROUP

34
Global Corporate Compliance Team
Group Associates

CEO
Global AML
Executive Manager Corporate
Compliance
Management Affairs Global
Manager
Global Corporate Affairs Committee (5)

Global Corporate Affairs Department (4)

Local CSR-AML Compliance Officers

North America (1)

Europe (3)

Africa (2)

Asia (9)

35
Strengthening
FOLLOW UP PLANNING

Dedicated Group
Continuous Rosy Blue Associates & Group

the
follow up CSR Strategy Executive
Mananagement

compliance Top down

Bottom up
Communication
Develop &
Update Policies
& Procedures
Develop Training
Manuals

model
Implementation of Rosy Blue
Corrective Actions Standards

Answer
Annual CSR Global Compliance
Report
Corporate Questions
Affairs
Department
Report to the
Group Associates &
Follow up on Collect Data & Global Corporate
Group Executive Legislation Statistics Affairs Department
Management Organize
Corrective Actions Seminars & External
Training Communication
Sessions

Documentation Local CSR-AML

review + Pre‑audit Implementation Compliance
on‑site Officers

REPORTING COMMUNICATION & IMPLEMENTATION

36
CSR information management system

37
Key Performance Indicators
Quantifiable and measurable results
Business
CSR
Partners

Workplace
Long term Health &
Safety
strategy

Environment Community

38
 Main achievements in 2008-2009

• CSR VISION announced

• CSR EXTRANET developed across the Group
• INTERNAL CONTROL SYSTEM through documentation
review and pre-audit on-site visits
• MEMBERSHIP UN GLOBAL COMPACT
• Rosy Blue E-TRAINING ACADEMY established

39
 Main achievements in 2008-2009

• ACTIVE INVOLVEMENT in RJC

• STRONG AWARENESS programme on HEALTH & SAFETY
• START AWARENESS programme ON ENVIRONMENTAL
IMPACT
• REVISED CODE OF CONDUCT and all policies and procedures
• CSR TRAINING across the Group

40
 Main achievements in 2008-2009
• EXTERNAL CSR ADVISORY BOARD established
– Mr. Thomas Leysen
Chairman Umicore, Chairman of the Federation of Enterprises in Belgium
– Baron Luc Bertrand, Chief Executive Officer, Ackermans & van Haaren
– Mr. Sonjoy Chatterjee, Director, ICICI Bank
– Mr. Tony Phillips, Former Chief Executive Officer, Barloworld
• REVIEW MEETING APRIL 3RD External CSR Advisory Board
– UAMS – CEO, COO, CFO Rosy Blue
• FIRST CSR REPORT ROSY BLUE GROUP published May 4th
• COP UNITED NATIONS

41
Internal CSR audits ON-SITE INTERNAL AUDITS
 Company tour + checklist

 Process & procedure control

INTERNAL ON-SITE AUDITS  AML procedure

 Know Your Customer procedure
2007 2008
 Cash transactions procedure
BELGIUM  Business records relevant to AML/CFT

USA compliance
 Kimberley process and System of
ARMENIA Warranties procedure
 Declaration on invoices
CHINA
 Disclosure procedure
HONG KONG  Procedure to contractors

THAILAND  Employment practices

 Health & Safety practices
SRI LANKA  Human Rights practices

RUSSIA  Open communication

 Environmental Practices
SOUTH AFRICA
 Documentation review: supporting documents

INDIA  Interviews with Management and staff

 Training records
ISRAEL
 Conclusion audit
JAPAN
 Corrective Actions

UAE  Follow up
42
 Internal Group Associates
Global Corporate Affairs Department

CSR audit
CSR Corporate Extranet
Training, Follow up CSR
Follow up Develop & update Policies & Collect Data &
Research & CSR initiatives Market
Legislation Procedures Statistics
Development Information

reporting

PLANNING
Facilitation by local CSR-AML
compliance officer

Upload supporting documents

Verification documentation by
Corporate Team

Pre-audit visits
External audits
PRE-AUDIT

Offices & factories

Corrective Corrective
Compliant Compliant
actions actions

Report to Group Report to Group

Report to Group Executive Report to Group Executive
REPORTING

Executive Management & Executive Management &

Management Group Management Group
Associates Associates

Follow up on Follow up on
corrective corrective
actions actions
MANAGEMENT
REVIEW

Final report Final report

issued by Group issued by Group
Associates Associates

Group Associates review 43

 External CSR audits by SGS
CSR AUDITS EXTERNAL DESKTOP REVIEW CSR AUDITS ON-SITE ASSESSMENT
2005/2006 2007 2008 2005/2006 2007 2008
BELGIUM 1INF
USA

ARMENIA 5INF

CHINA 4INF

HONG KONG

THAILAND 2INF
SRI LANKA 1INF 2INF

RUSSIA

SOUTH AFRICA

INDIA 4INF 4INF 3INF

ISRAEL 1INF
JAPAN

UAE
44
 SGS

“Rosy Blue have been an active participant of the BPP programme

since its inception in 2005. NO MATERIAL BREACHES
HAVE BEEN FOUND TO DATE and they are COMPLIANT
with the requirements of this programme, having taken
PROMPT ACTION to close out any issues found in our sample
assessments.“

Mrs. Effie Marinos

CSR Solutions Manager - EAME

45
46
 ROSY BLUE CASE:
IMPLEMENTING HUMAN RIGHTS

47
 China Case
June 29th 2007 the National People’s
Congress adopted the long-awaited China
Labour Contract Law (LC Law), effective as of
January 1st 2008
ACTIONS
• Appointed LOCAL LEGAL COUNSEL: Allen & Overy Shanghai
• PREPARATORY MEETINGS – conference calls – local
Compliance Officer – Global Corporate Affairs Department –
lawyers to agree upon planning and implementation of the new
legislation
• PRE-AUDIT VISITS on regular basis to focus on
implementation and ongoing guidance

48
 China Case

MAIN CHALLENGES
• Finding the RIGHT BALANCE beween the interpretation of
the local legislation on a national and local level
• TRAINING all staff on changes in their contract and explaining
the working regulations
• Training in COMPLIANCE

49
 China Case

OUR APPROACH
• Regular visits to ENCOURAGE COMMUNICATION and
TRUST between all the parties involved
• TOP DOWN – BOTTOM UP approach

50
SUPPLY CHAIN MANAGEMENT
CSR IN ACTION

51
 Innovative Approach to sustainable Supply – Israel
Case
Practical steps to Supply Chain Sustainability
From Suppliers Burden to Inspiration

Main sources
• A Practical Guide to Continuously Improving Upstream Impacts by Applying the Global
Compact Principles (draft 19 April 2010) – www.unglobalcompact.org
• Unchaining Value: Innovative approaches to sustainable supply – UNEP – www.unep.org
• Business in the Community – www.bitc.org.uk
• Case input from Umicore, Belgacom, Solvay and Rosy Blue

52
 Definition

We define supply chain sustainability as the

management of ENVIRONMENTAL, SOCIAL, and
GOVERNANCE impacts that result from or are
affected by a company’s DIRECT spend with
suppliers, AND INDIRECT IMPACTS in the upstream
supply chain from material inputs, manufacturing,
and distribution

53
What steps can my company take?

COMMIT

ASSESS

COMMUNICATE

DEFINE

MEASURE

IMPLEMENT

54
Objective of supply chain sustainability

• To CREATE, PROTECT, AND GROW LONG-TERM

ENVIRONMENTAL, SOCIAL, AND ECONOMIC VALUE
for ALL STAKEHOLDERS involved in bringing products and
services to market.

• Where a supply chain typically refers to the chain of suppliers

inputting to a final product, value chain also encompasses
thinking ABOUT THE VALUE CREATED BY THE CHAIN,
particularly to end consumers.

55
Long –term viability for your business
At every stage in the life-
cycle of specific products
there are social and
environmental impacts, or
externalities, on the
environment and on
people. In addition,
governance, or the
accountability of
organizations to their
stakeholders for their
conduct, is important at
every stage and
throughout the supply
chain.

56
 Why is it important?
• Stronger supplier relationship to deliver added-value, ensure
reliability, enable innovation and provide sustainable stories
• Drive down costs-better working conditions reduce turnover and
improve quality and reliability

• Mitigate risks –risks legal /operational/ reputational) are

anticipated and managed, costs reduced and productivity enhanced

• Access to investments

57
 Why is it important?
• Corporate brand and consumer confidence are protected and
enhanced- Secure license to operate in certain communities

• Communities, Consumers and Shareholders benefit

• Uncover innovative new approaches to develop products and

services

• Sharing the risks and rewards

58
 So just opportunities? NO!!!! –
CHALLENGING PROCESS
• Underestimating consequences
• Failing to anticipate local community and opinion former
perceptions of environmental and social impacts
• Media- campaigns and lawsuits
• Hard operational consequences such as disruption to supply,
increased cost and lack of key raw material
• Unforeseen costs

59
 Getting Started on Supply Chain
Sustainability
• Evaluate the business case for action !
• Understand the external landscape.
• Identify the highest priority supply chain issues for your
company
• Evaluate risks and opportunities
• Build the internal support to move forward
• Develop policy
• Integrate throughout the procurement process
• Report externally and internally

60
 Build your business case

Business Drivers for

Supply Chain Sustainability

Managing Business Realizing Efficiencies Creating Sustainable

Risks Products
 Minimize business  Reduce cost of material  Meet evolving customer
disruption from inputs, energy, and business partner
environmental or labor transportation requirements
problems  Increase labor  Innovate for changing
 Protect company’s productivity market
reputation and brand
value

Governance, Management, Transparency

61
 Understanding the External Landscape

• Opportunities to partner with others, and the expectations of

stakeholders

• Benchmarking against Peer Companies

• Understanding the expectations of the stakeholders

62
CHALLENGES AHEAD

63
 Challenges Ahead

• Time of global ECONOMIC UPHEAVAL and

UNCERTAINTY
• Eventhough we are in TOUGH ECONOMICAL TIMES and
facing enormous PRESSURE TO CONTROL COSTS, we will
CONTINUE TO MOVE FORWARD in compliance – CSR IS
A LONG TERM ENDEAVOR
• QUANTIFIABLE and MEASURABLE results
 Challenges Ahead

• A major challenge is to WORK CLOSELY with ALL OUR

STAKEHOLDERS throughout the SUPPLY CHAIN to focus
on CSR and EVOLVE to sustainable development.
• Together we can achieve a more SUSTAINABLE FUTURE

WE WELCOME YOUR FEEDBACK

CSR@ROSYBLUE.COM
 Challenges Ahead

• QUANTIFIABLE and MEASURABLE results

• A major challenge is to WORK CLOSELY with ALL OUR
STAKEHOLDERS throughout the SUPPLY CHAIN to focus
on CSR and EVOLVE to sustainable development.
• Together we can achieve a more SUSTAINABLE FUTURE

WE WELCOME YOUR FEEDBACK

CSR@ROSYBLUE.COM
Be the CHANGE you
want to see in the
WORLD
Mahatma Gandhi

67
Thank you

68