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The Rap on Ethics October 29, 2010 (1 comment)

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New York, NY—It’s been more than a decade since the diamond and jewelry industry found itself in the crosshairs of Global Witness and other non-governmental (NGO) watchdog organizations over human rights abuses in the diamond fields of Sierra Leone. The famed Kimberley Process has taken significant steps to eradicating conflict diamonds but the recent violence in the Marange region of Zimbabwe have proven its limitations.

At the Rapaport International Diamond Conference, three afternoon sessions were devoted to the subject of diamonds, ethics, social responsibility, and the consequences of ignoring both. 

“Investors as well as others look at human rights,” said Anabel Short, head of program at the Business & Human Rights Resource Centre, an international NGO that monitors companies’ human rights impacts, both positive and negative.

But when even deplorable working conditions are a better choice than starvation, where is the line between acceptable practice and human rights violation?

Short explained that there are certain universal human rights, first put forth by the United Nations in 1948, and reaffirmed again in 1993 at the World Conference on Human Rights in Vienna, Austria. These include, but are not limited to: the right to life, liberty, and security of person; to not be held in slavery; and not be subjected to torture or cruel, inhuman, or degrading treatment or punishment.

“No matter what religion one practices, one thing that is common is some version of the Golden Rule. The standard of ethical conduct is to treat others as you want to be treated,” said Peter Singer, professor of bioethics at Princeton University. “Ethics go beyond law. That which is legal is not always ethical,” he said, citing Nazi Germany as an example.

He also illustrated how developing nations rich in natural resources often end up in far worse shape than countries without resources. “The resources that should bring benefits to a country instead end up being a curse. Revenue breeds political instability and incentives to either stage a coup or guard against a coup.” Our ethical dilemma on the other side of the world is complicity, he said.

That may be changing. Dr. Michael Conroy, cofounder of Colibri Consulting and chairman of the board of Fair Trade USA, says fundamental shifts in [Western] societal values and increasingly effective NGO activism is having an affect.

“There have been unparalleled changes in global corporate accountability toward societal and environmental practices in the past 15 years.” Driving that change, he says, are a combination of brilliant marketing campaigns, creation of third-party independent certification systems, and internal champions within the various corporations.

Particularly effective have been some marketing campaigns directed at corporate brands seen as acting irresponsibly. He cited the ForestEthics campaign against Victoria’s Secret, one of the largest catalog merchandisers in the United States. Environmental NGOs such as ForestEthics claimed the retailer sent out 10 million catalogs a day, and refused to use recycled paper. Whether the number was accurate or not, it was true that the catalogs were not printed on recycled paper and that many were not requested by recipients. After an intense campaign to alert consumers, the retailer did, in fact, change its practices, both in terms of reducing the number of catalogs mailed and by using recycled paper.

“It’s far more effective to direct efforts at a company’s brand, rather than just boycotting its products,” said Conroy, who also authored Branded! How the ‘Certification Revolution’ is Transforming Global Corporations. “Branding is essential to global growth, but with every dollar a company invests in expanding its brand, it also increases the risk of challenges to the brand on social or environmental grounds.” Conroy's book (left) won a silver medal in the 2008 Axiom Business Books Awards, in the area of business ethics.

Certification systems are another form of risk management, he said. Certification can reduce the cost of providing assurance of corporate social and environmental responsibility, but certification is only credible if done by a respected third party. The upside is that global co-branding with well-known NGOs provides defensive benefits if the brand is attacked by another NGO.

Supply chain certification also brings other tangible benefits to a corporation, such as product differentiation in a crowded field, and increased employee pride and commitment. He cited Home Depot, which found employee turnover dropped and pride increased when it committed to sourcing wood from sustainable forests.

In the jewelry industry, can one individual make a difference?

Susan Jacques, CEO of the Omaha, NE-based Borsheims thinks so. Speaking from the audience, she said, “We’re just one small store, but we sent a letter to all of our suppliers stating unequivocally that Borsheims will not buy Marange goods.” Not loose, not set in jewelry, not in diamond watches, not at all, she emphasized.

A native of Zimbabwe, Jacques is particularly troubled by the political situation in her homeland, but her decision to send this letter to her suppliers was based on her belief that it’s the right thing to do—at best, to try to be a force to end human-rights abuses in the diamond fields there, or, at least, to not be complicit in it.

“One of my sightholders called and said, ‘Susan, what you’re asking is virtually impossible. Marange diamonds are all mixed in [to the parcels] and it’s not possible to separate them out.’ To which I replied, if you don’t, we can’t do business with you.”

“Acting ethically can be not only the right thing, but also the satisfactory thing to do,” said Singer.

View the conference closing session, with discussion between all speakers, here:

http://www.diamonds.net/cms/Conference/2010/idclive

By Hedda Schupak

Editor, The Centurion 

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