11th May 2010KAURI Workshop on Human Rights

The dynamics of Corporate Social Responsibility in

challenging times with a focus on Human Rights

By Iris Van der VekenManager Corporate Affairs Global

Chair of UN Global Compact Network Belgium

AGENDA

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• Some background information about the

diamond industry

• About Rosy Blue

•Our CSR Business Model

• Challenges ahead

•Q&A

BACKGROUND INFORMATION DIAMOND INDUSTRY

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Taking a responsible stand in increasingly challenging times

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• 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?

Taking a responsible stand in increasingly challenging times

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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

Key Initiatives

Mining Export Import Polishing Manufacturing Retail

Kimberley Process Certification System of Warranties

Source: www.diamondfacts.org

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Taking a responsible stand in increasingly challenging times

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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

Initiative of the Responsible Jewellery Council

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• 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.

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RJC Membership

HOW ROSY BLUE ANTICIPATES AND IS COMMITTED TO TAKE A

LEADERSHIP POSITION IN CSR BEST PRACTICES

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Rosy Blue in the diamond supply chainGlobal sales 2008 $1,8bn

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Our global presence - 14 countries

• USA

• Belgium • Ar

menia• Isra

el• UA

E

• India

• Sri Lanka

• South

Africa

• Hong Kong

• Russia

• China • Jap

an

• Thailan

d

• Luxembourg

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Employment to 10,000 people4.9%

1.5%

22.0%

0.6%

44.4%

0.4%

0.5%

0.5%2.0%

13.3%

6.3%2.3% 1.5%

Armenia

Belgium

China

Hong Kong

India

Israel

Japan

Russia

South Africa

Sri Lanka

Thailand

UAE

USA

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Our Stakeholders

Auditors Trade associations Media

Building trust with our

Stakeholders

Employees Business partners

Financial institutions

Industry institutions

Local communities

Customers

Governments

Our Suppliers

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OUR APPROACH TO CSR

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Core ValuesACCOUNTABILITY

INTEGRITYDIVERSITY

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Family Philosophy

Compassion Child care Healthcare

Ahinsha(non-violence)

Truth Education Conservation

Equal rights

Valor

Female participation & integration

Religion

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• 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!

Within every change there is an opportunity for dynamics

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Diamonds and intangible value

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• 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

JUNE 18TH WE PRESENT OUR SECOND CSR REPORT

WWW.ROSYBLUE.COM

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Rosy Blue Commitment

General CSR Initiatives

• UN Global Compact

Industry wide Initiatives

• Responsible Jewellery Council

Proprietary Corporate Initiatives

• Rosy Blue Internal CSR Model

• Best Practice Principles• Business Excellence Model• Wal-Mart

National Laws and Regulations

International Laws and RegulationsKimberley Process & System of Warranties

CONSUMER CONFIDENCEVoluntary Initiatives

ONGOING COMMITMENT

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Key Initiatives

Business responsibilities

Social responsibilities

Environmental responsibilities

Product integrity

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

Key Initiatives

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Signifying our COMMITMENT to operate in RESPONSIBLE and SUSTAINABLE manner

United Nations Global Compact

ROSY BLUE SIGNSUN GLOBAL COMPACT200

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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.

United Nations Global Compact

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United Nations Global CompactPrinciple 1: Businesses should support and respect the protection of internationally proclaimed

human rights, andPrinciple 2: Businesses should make sure they are not complicit in human rights abuses.

Human rights

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; andPrinciple 6: Businesses should uphold the elimination of discrimination in respect of

employment and occupation.

Labour standards

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.

Environment

Anti-corruptionPrinciple 10: Businesses should work against corruption in all its forms, including extortion and

bribery.

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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

United Nations Global Compact

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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

United Nations Global Compact

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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 localdedicated 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.

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Key Milestones of our CSR JourneyDec 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

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Global Corporate Compliance Team

Local CSR-AML Compliance Officers

North America (1)

Europe (3)

Africa (2)

Asia (9)

Global Corporate Affairs Committee (5)

Manager Corporate Affairs Global

CEO

Executive Management

Group Associates

Global AMLCompliance

Manager

Global Corporate Affairs Department (4)

Strengthening the

compliance model

FOLLOW UP

REPORTING COMMUNICATION & IMPLEMENTATION

PLANNING

Continuousfollow up

Rosy BlueCSR Strategy

Dedicated Group Associates & Group

Executive Mananagement

Implementation of Corrective Actions

Rosy Blue Standards

Report to the Group Associates &

Group Executive Management

Corrective Actions

Global Corporate Affairs Department

Documentation review + Pre audit ‑

on site‑Implementation

Local CSR-AML Compliance

Officers

Global Corporate

Affairs Department

Annual CSR Report

Answer Compliance Questions

Follow up on Legislation

Collect Data & Statistics

Organize Seminars &

Training Sessions

Top downBottom up

Communication

Develop Training Manuals

Develop & Update Policies & Procedures

External Communication

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CSR information management system

Key Performance IndicatorsQuantifiable and measurable results

Environment

Long term strategy

CSR Business Partners

Workplace Health & Safety

Community

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• 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

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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

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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

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Main achievements in 2008-2009

Internal CSR auditsINTERNAL ON-SITE AUDITS

2007 2008

BELGIUM

USA

ARMENIA

CHINA

HONG KONG

THAILAND

SRI LANKA

RUSSIA

SOUTH AFRICA

INDIA

ISRAEL

JAPAN

UAE

ON-SITE INTERNAL AUDITS· Company tour + checklist· Process & procedure control

o AML procedureo Know Your Customer procedureo Cash transactions procedureo Business records relevant to AML/CFT

complianceo Kimberley process and System of

Warranties procedureo Declaration on invoiceso Disclosure procedureo Procedure to contractorso Employment practiceso Health & Safety practiceso Human Rights practiceso Open communicationo Environmental Practices

· Documentation review: supporting documents· Interviews with Management and staff· Training records· Conclusion audit· Corrective Actions· Follow up 42

Internal CSR audit reporting

PLAN

NIN

G

CSR Corporate Extranet

Group Associates

Develop & update Policies & Procedures CSR initiatives

Global Corporate Affairs Department

Collect Data & Statistics

Follow up CSR Market

Information

Facilitation by local CSR-AML compliance officer

Upload supporting documents

Verification documentation by Corporate Team

Compliant Corrective actions

Pre-audit visitsOffices & factories

Report to Group Executive

Management

Report to Group Executive

Management &Group

Associates

Follow up Legislation

Training, Research &

Development

Follow up on corrective

actions

Final report issued by Group

Associates

Compliant Corrective actions

External audits

Report to Group Executive

Management

Report to Group Executive

Management &Group

Associates

Follow up on corrective

actions

Final report issued by Group

Associates

Group Associates review

PRE-

AUD

ITRE

PORT

ING

MA

NAG

EMEN

T RE

VIEW

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External CSR audits by SGS

BELGIUM

USA

ARMENIA

CHINA

HONG KONG

THAILAND

SRI LANKA

RUSSIA

SOUTH AFRICA

INDIA

ISRAEL

JAPAN

UAE

CSR AUDITS ON-SITE ASSESSMENT

2005/2006 2007 2008

4INF

2INF

3INF

CSR AUDITS EXTERNAL DESKTOP REVIEW

2005/2006 2007 2008

1INF

5INF

1INF 2INF

4INF 4INF

1INF

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“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

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SGS

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ROSY BLUE CASE:IMPLEMENTING HUMAN RIGHTS

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China Case

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

June 29th 2007 the National People’s Congress adopted the long-awaited China Labour Contract Law (LC Law), effective as of January 1st 2008

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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

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China Case

OUR APPROACH• Regular visits to ENCOURAGE COMMUNICATION and

TRUST between all the parties involved• TOP DOWN – BOTTOM UP approach

SUPPLY CHAIN MANAGEMENT CSR IN ACTION

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Innovative Approach to sustainable Supply – Israel CasePractical steps to Supply Chain Sustainability

From Suppliers Burden to Inspiration

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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

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

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Definition

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What steps can my company take?

COMMIT

MEASURE

IMPLEMENT

COMMUNICATE

DEFINE

ASSESS

• 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.

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Objective of supply chain sustainability

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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.

• 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

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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

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Why is it important?

• 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

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So just opportunities? NO!!!! –CHALLENGING PROCESS

• 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

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Getting Started on Supply Chain Sustainability

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Build your business case

• Managing Business Risks

• Realizing Efficiencies

• Creating Sustainable

Products

• Business Drivers forSupply Chain Sustainability

Reduce cost of material inputs, energy, transportation

Increase labor productivity

Minimize business disruption from environmental or labor problems

Protect company’s reputation and brand value

• Governance, Management, Transparency

Meet evolving customer and business partner requirements

Innovate for changing market

• Opportunities to partner with others, and the expectations of stakeholders

• Benchmarking against Peer Companies

• Understanding the expectations of the stakeholders

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Understanding the External Landscape

CHALLENGES AHEAD

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• 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 FEEDBACKCSR@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 FEEDBACKCSR@ROSYBLUE.COM

Challenges Ahead

Be the CHANGE you want to see in the

WORLDMahatma Gandhi

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Thank you

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