On the RJC audit trail

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Why 2011 will divide the green jewels from the greenwash at the RJC.

In the next few months 120 companies will have to run the gauntlet of the Responsible Jewellery Council’s external auditing process as its controversial free ride comes to an end. As 2011 looks set to divide the green from the greenwash, Rachael Taylor investigates the myths surrounding the auditing process.

In the early days of the Responsible Jewellery Council (RJC), membership was granted on a promise. If a retailer, manufacturer or wholesaler wanted to become part of the RJC all they had to do was pay a membership fee and make a public pledge to trade in a responsible way, but in 2011 all this is set to change.

The RJC has announced that all of its members who joined the scheme before December 31, 2009, must complete an independent auditing process by the end of 2011, or else they will be expelled from the programme. This means that 120 companies who have joined the RJC must now pass though the auditing process in the next 10 months; a potentially costly and time-consuming exercise.

Just five RJC members have already completed the auditing process: Gay Freres, Cartier, Raymond Bloch, Metalor and Rubel & Menasche. However, the RJC says it “expects to add to this in the coming weeks”.

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Talking about the certification success, Cartier’s president and chief executive Bernard Fornas says he “believes the RJC standard is a powerful and effective way to drive positive change through the jewellery supply chain from mining all the way to retail” and is proud to have been one of the first companies to have completed the formal auditing process.

With a huge variety of companies signed up to the RJC, from huge national chains such as Argos to small brands such as Leblas and single-store retailers including London’s Nicholas James, there has been confusion over just how much the auditing process will cost and if it will be a flat fee. With a lack of clarity and the rumour mill working hard, there had been talk in the industry that a small designer-maker, for example, would have to pay the same as a major corporation.

The idea of a flat fee is certainly a myth, according to RJC chief executive Michael Rae. Just like the RJC membership fee is related to a member’s annual turnover, the auditing costs will also vary. He adds: “The rates charged by auditors will vary based on the nature and scale of the member’s business and competition in the market, and are subject to commercial arrangements between the member and the auditor.”

While the RJC does not set standard pricing structures, it has provided guidance in the RJC Assesment Manual which it says members can use to get “an indication of the scale of the audit and hence the likely cost”.

To find out what an audit will actually cost, which is based on how many days the audit takes to complete and is so related to the size and complexity of the business, members must directly contact an approved RJC auditor for a quote. For UK members the only choice of RJC-approved auditors is SGS or Specialized Technology Resources, but Rae says that he expects to add new auditors to the list in the coming months.

So costs aside, what will the auditors be looking for? “When assessing the RJC member’s conformance, by seeking objective evidence, the auditor will take into account the nature, scale and impact of the RJC member’s business,” explains Rae. The so-called impact of the business is related to the RJC’s Code of Practices which focuses on contributing to sustainable business ethics through key areas: business ethics, human rights and social performance, environmental performance and management systems.

This is the same system that RJC members should have checked their business against when completing an initial self assessment when joining, so in theory should have readied themselves and got the business to a stage where it would be possible to pass a formal audit with relative ease.

But this is only a theory. The very nature of self assessment means that nobody is checking up; it’s up to the individual business to make good on its pledge.

While joining the RJC to public fanfare only to fail to meet its criteria would be PR suicide for most businesses and while it seems unlikely that any would risk its reputation by purposely doing so, the ethical bandwagon is a tempting machine to get involved in. And with no formal checks needed until this year, many members have enjoyed years of association with the RJC without providing proof of responsible jewellery trading.

Even for those members who have joined the RJC in good faith, the auditing process could be a financial strain that is impossible to meet in a climate in which businesses are struggling to survive. With 120 companies facing auditing in 2011, would it be plausible that some members will drop out of the RJC this year, be it for financial or business structure reasons?

“All RJC members have joined the RJC knowing that independent third-party auditing, leading to certification, was a central tenet of the RJC system’s credibility,” says Rae. “We do not expect to lose RJC members because of the auditing process. That said, companies are free to join or leave the RJC at their discretion. Their reasons for joining – or leaving – are for them alone to judge, unless, of course, they fail to meet the requirements of the RJC Member Certification System, when they will be expelled.”

RJC members that have joined the scheme since the beginning of 2010 or will join in the future will also have to face formal auditing but will get two years’ membership before mandatory certification. Rae explains the reasoning behind the two-year grace period: “When the RJC was founded, there was not a system against which potential members could be pre-audited. Now that the development of the RJC Member Certification System has been completed, it is appropriate for members to be given a reasonable time period in which to be audited.”

But surely those who want to join the RJC should be asked to make an effort to trade in a responsible way before winning membership – would pre-auditing not be more appropriate? Rae says that the RJC is not ruling out introducing pre-auditing in the future, but at the moment he says it has “no plans for that at this time”.

Another rumour that has been doing the rounds in the industry is that once an RJC member is fully audited, it can no longer trade with businesses that are not RJC members. Again, this is a complete inaccuracy according to Rae, and would in fact be illegal. Rae says: “RJC members aspire to demonstrate responsible business practices. They also expect high standards of their business partners, such as associate companies, suppliers and contractors. However, the RJC does not require that a member’s business partners, their suppliers or customers, must also be RJC members. Such a requirement would be illegal as it would breach anti-trust laws in many countries, including the UK and USA. This is therefore an individual business decision.”

Even with these myths now dispelled, the layers of bureaucracy can make joining the RJC and achieving certification seem confusing to many people. This is something that the RJC has recognised and has addressed by running workshops and training sessions to assist members facing auditing with training topics such as Preparing for and Conducting Self Assessments, specific Sector Guidance and guidance on the critical Ethical, Social and Environmental Issues in the Supply Chain.

The RJC is also working with trade associations to look at additional ways to provide support. In the UK, the British Jewellers’ Association (BJA) and the National Association of Goldsmiths have teamed up to try and help the UK jewellery industry to battle through the RJC red tape.

BJA chief executive Simon Rainer says that the two associations are working together to create a pan-industry working party that will help jewellers, brands and retailers that want to work ethically to do so.

“The whole problem has been the greyness about this and assumption has become fact,” says Rainer. “What I have found is that designers and manufacturers want to know more so we’ve formed a small working party to find out what the issues are and what the answers are. If people need help then we are here for them.”

Rainer says the working party will open up a dialogue with the UK jewellery industry and will try to act on individuals’ behalves to clarify this murky area, from sourcing ethical materials to dealings with the RJC.

The RJC has been building up a strong brand since its launch and the introduction of the formal auditing process this year will add gravitas. For those serious about trading ethically in the jewellery sphere, membership is a worthwhile consideration, but for those who are in it for the greenwash this will be the year that will separate the serious ethical players from the opportunist marketeers.

 

WHY JOIN THE RJC?
The Responsible Jewellery Council is an international not-for-profit organisation bringing together more than 260 member companies committed to promoting responsible ethical, human rights, social and environmental practices in a transparent and accountable manner throughout the jewellery industry from mine to retail. Their commitment aims to reinforce consumer and stakeholder confidence in diamond, gold and platinum metals jewellery products. The RJC has developed the RJC Member Certification System, a certification system that will apply to all members’ businesses that contribute to the diamond, gold and platinum metals jewellery supply chain. Certified Members have the benefit of recognition against an international certification system, supporting their own reputations and enhancing consumer confidence in the jewellery supply chain more generally.

 

This article was taken from the March 2011 issue of Professional Jeweller magazine. See the whole edition by clicking here.

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