All too often, behind the glitter of gold are ugly environmental and social costs: Unregulated mines creating toxic wastes, child laborers working under grim conditions, rivers and bays polluted with waste. Sales of diamonds, meanwhile, have been used to finance wars in Africa. Under pressure, the jewelry industry has responded with programs to monitor the supply chains of precious metals and gems from the mine to the retailer. (Last year, in a FORTUNE story headlined Green Gold, I wrote about Wal-Mart and Tiffany’s pioneering efforts to find “sustainable gold.”) But cleaning up the mining industry is an enormous challenge, and so there are bound to be setbacks as well as gains.
One big setback this week: A government and industry initiative set up to stop the flow of so-called conflict diamonds, known as the Kimberly Process, failed to suspend Zimbabwe even after its own investigators had found that the Zimbabwean military had organized smuggling of diamonds and assaulted other miners. According to The New York Times:
Human rights campaigners and nongovernmental organizations immediately denounced the decision, saying that the Kimberley Process had shown it was incapable of stopping gross abuses and the flouting of international standards.
Kimberly Process officials said they want to give the government a chance to come into compliance. We’ll see, but know that, for now, diamonds certified as conflict-free may be helping to finance human rights abuses in Zimbabwe.
On a more encouraging note, luxury jeweler and watch-maker Cartier is the latest retailer to look for more responsible ways to source its gold. The French-based firm recently signed an agreement to buy gold from an innovative Italian gold-mining venture based in Honduras. Globalization is a fact of life in the gold biz.
The Honduran mining venture, called Eurocantera, combines a modern alluvial gold mine (meaning that the gold is found in water, close to the surface, requiring no blasting into rock) with small-scale miners who use traditional methods of panning gold. This venture is noteworthy because it supports artisanal miners in a poor country, not only by providing them with decent wages, but by offering education in finance and technology, a free health clinic and road building that is needed to move gold to market but will provide other benefits as well to isolated villages. Put simply, it’s a well-rounded approach.
“Cartier set out to answer the question, what can we do with small-scale miners to help them become more economically and environmentally sustainable,” says Assheton Carter, head of corporate engagement for PACT, a Washington-based nonprofit that works to empower communities in poor countries to improve people’s lives. (PACT manages grants for U.S. AID, Sweden and Norway, among others, and it advised Cartier) Assheton is a mining expert who formerly worked for Conservation International and guided Wal-Mart’s jewelry and mining efforts.
Cartier is not a big player in gold, buying less than 0.5% of the gold used in the global jewelry market. So, as Pamela Caillens, director of corporate responsibility at Cartier, explained to me by email, the company initially worked with other like-minded firms to former a group called the Responsible Jewelry Council back in 2005. This group, which includes retailers, refiners, diamond cutters, manufacturers and miners, will set global standards and eventually a certification process. Caillens says: “We intend for all our gold supply to meet the RJC standard.”
At the same time, Cartier sought out a source for gold that it could feel really good about and settled on a partnership with an Italian family-owned gold mining company called Goldlake. (You can read more about Cartier and Goldlake here on the PACT website.) The Eurocantera mine operated by Goldlake provides only a fraction of Cartier’s gold supply, according to Caillens, but it’s an attempt to showcase the very best practices.
Cartier has agreed to buy gold from Eurocantera for a minimum of three years, paying for its entire production during the first year and promising to spend at least $10 million in years two and three. This kind of commitment enables the mine to set high environmental and social standards, knowing it can count on a steady income stream.
The gold from Honduras won’t be used in a particular product or line of products, Caillens said. So why bother to invest in the mine, I asked her. She replied:
Our commitment is not about marketing. For us, sustainability and responsibility are not competitive advantages or anything like a commercial proposition. We don’t want customers buying Cartier creations because they are “more responsible” – we want them to elect, on a level playing field, one of our products for its design and quality. Our whole industry has to gain from better business practices and will lose from thinking otherwise.
I put the same question to Assheton Carter. He said jewelers are increasingly concerned about young shoppers who are becoming more educated about the impact of their purchasing decisions:
I don’t think consumers are knocking at their door, asking, ‘what’s the provenance of this ring?’ But the consumers of tomorrow are going to be asking more questions of their jewelers.
And that, of course, is a very good thing.
For more, check out the No Dirty Gold campaign which is working with jewelers to block the development of the Pebble mine in Bristol Bay, Alaska.