A Pivotal Role for Fairtrade Gold

A few days ago I spoke at a Fairtrade Foundation gold meeting in London – standing in for Vivien Johnston – and was privileged to meet the miners from Peru and Bolivia who supply the raw material, and to hear first-hand their accounts of the conditions under which they work.  Their stories are a powerful testament to the benefits that can accrue from certified gold, and the positive effect that it has on local communities and people. I came away convinced that Fairtrade Gold has a pivotal role to play in building a traceable and transparent supply chain. Having noted the difficulties that had faced UK industry I was delighted to receive a positive response in return

Fairtrade Meeting (3) Oct 13

Consumer tastes are changing! Influenced by new products; technological advances; economic circumstances; and latterly concerns for the environment and the future safety of the world in which we live. This has not happened overnight. Environmental activists have been working for more than forty years, to raise awareness of the ecosystems on which we all rely.

Hand in hand with environmental concerns we have grown aware of the terrible price sometimes paid by the people who bring us the necessities that we take for granted. The result is that consumers’ relationships with the goods they buy are far more complex than ever before, and there has been a welcome rise in the number of people who want to buy ethically.

The last decade has seen considerable change in the jewellery sector. Many more miners, raw material processors, designers and jewellers want to act responsibly and ethically, and with due respect for the planet and the people that populate it. In that time there has also been a flourishing of ethical initiatives touching on all levels and segments of the sector. However the supply chain is very complex, with a proliferation of companies and individuals playing their part in bringing products to market. The result is a web of sometimes complimentary, sometimes conflicting, and often over-lapping schemes, each with their own priorities, timescales, and objectives. And of course the world does not stand still.

The result is a matrix that is not easy to navigate. Customers seeking greater understanding, and jewellers committed to the ideals of ethical trading, find themselves baffled by the plethora of initiatives. A couple of years ago, The National Association of Goldsmiths (NAG), the British Jewellers Association (BJA), and the Gemmological Association of Great Britain (Gem-A) came together to form a joint ethics working group to try and answer some of the more pressing questions; put the initiatives in context; and devise some straightforward and un-ambiguous guidance for jewellers. So, the Ethics Working Group coalition is formed of the three largest trade associations of the British jewellery industry, with occasional input from CIBJO, the World Jewellery Confederation. The NAG represents the ‘selling’ part of the industry, the BJA the ‘making’ part, and lastly, the Gem-A is a prestigious educational resource, having many thousands of students and graduates around the world.

These trade associations all have different roles to play. However, one common thread is a sincere commitment to improvement in the jewellery industry. They are also firmly united in the promotion of best practice in UK jewellery businesses. This ultimately means advocating industry-wide awareness of the challenges within the supply chain. But it also gives them an opportunity to engage closely with suppliers and to form strong partnerships with those who share this commitment.

Consumer tastes and preferences constantly change. Jewellery, as a luxury item, now competes with new products –computers, gadgets, holidays, and even experiences, for the consumer’s disposable income. Since the beginning of the recession in 2008, economic circumstances have put increasing pressure on consumers who want to keep up with the newest products on the market. Also, materials like plastic, wood, rubber, and non-precious metals, have become commonplace in jewellery manufacture. The number of items containing gold, silver, platinum, and palladium, and Hallmarked in the UK, has dropped dramatically over the last decade. From 35 million in 2003 to just over 9 million last year.

The result is that consumers are more selective than ever before, but this has not affected the number of people who want to buy fairly and ethically! Sales of ethical goods and services have increased despite the recession, growing to more than £47bn last year. And a Co-operative Bank report calculates that since the economic downturn, five years ago, the value of ethical markets including Fairtrade products, green energy, free-range and sustainable food, has grown from £35.5bn to £47.2bn. The same report shows that sales in ethical consumer markets have grown from £13.5bn in 1999.

In the last decade there has been a considerable shift in the jewellery sector. Across the globe there is a shared ambition for people to act responsibly and with due respect for the environment and other people in the supply chain. Many more miners, refiners, designers and jewellers have come to realise that they want to do ‘Good Business’ with each other whilst protecting the environments in which they live. The challenge is to connect these networks!

minersGold is treated as a commodity by investors, and is valued for its properties as a conductor by electronics companies, and in the automotive industry. However, 43% of gold represents something quite different. Jewellery has no use! It is pure ornament! Yet globally, it represents the largest use of gold!

Jewellery is a sentiment, an emotion and a passion. And pride is one result of the design innovation, the technical virtuosity, and the quality of the materials, which are intrinsic to the product itself. Luxury jewellery companies understand the pride their customers feel when they wear a piece of their jewellery. It’s not simply a product. It’s imbued with an identity, a brand, a personal statement.

Consumers now expect that pride to extend to ‘ethics’. They have become a core ‘brand value’ for many jewellery companies. The most future-thinking brands see the benefits of forming strong strategic partnerships with miners. They want gold mined by people who share their pride, passion and commitment. They want to know that every piece of the supply chain is something to take pride in. Recognising these shared values is one thing. Implementing them is quite another!

The world does not stand still. It is constantly re-shaping around us, depending on politics, economics and individual growth. Continual adjustment is requires to make sure our values remain aligned, and we continue to be accountable to each other.   The Fairtrade label has a long history of delivering a ‘brand’ of ethics to a range of consumer products including coffee, bananas, and chocolate.

As we know, gold has its own complexities. However, since 2011 Fairtrade has brought their trusted label to the outlets of some of the leading jewellery designers in the UK. The UK ethics group wholeheartedly supported this, but in 2012 it recognised that there were some factors which were preventing larger companies from adopting ASM-sourced gold in their supply chain. And, in turn, this was preventing Fairtrade from scaling-up gold production from their miners.

So, it conducted a series of industry consultations and workshops; taking stock of the issues of human rights; negative community impacts; and environmental threats that exist within jewellery supply chains – and ultimately undermine consumer confidence in the business. It also engaged with NGO’s who have campaigned to highlight such issues, or have lobbied for improvements from the sector. Next it held consultations with representatives from the gold industry and heard from their perspective why they found it difficult to achieve transparency.

There have been numerous new standards created which affect gold. These include the World Gold Council’s Conflict Free standard; the OECD Due Diligence guide for conflict minerals; the Responsible Jewellery Council’s chain of custody certification scheme, and the US Dodd Franks Act. They were examined to see how they applied to the trade – from refiners and bullion dealers to manufacturers – and the investment banks who hold the bars in their vaults. Even the London Bullion Markets Association (LBMA) Responsible Gold Guidance were studied. The committee also looked at the challenges businesses faced in complying with these standards.MinersFromSotramiFairtradeGoldMinePeru

The supply chain was simply not designed with transparency in mind, and there are too many stumbling blocks between mining and processing the gold; to the way it’s handled by banks and bullion dealers at a national level. In February this year, the committee published a ‘Gold Paper’ which looked at all aspects of the gold supply chain and identified the ‘choke-points’ that prevented companies from achieving transparency, traceability and improved accountability. It also contained ten recommendations towards jewellers achieving transparency.

Until recently there seemed to be two aspects of Fairtrade gold which were limiting growth. One was the price structure, which, given the already high price of gold, made it difficult to be competitive. The second was the marketing strategy. It needed to be more visible to consumers of small brands, but this wasn’t necessarily acceptable for companies who didn’t want to appear to ‘co-brand’ with the Fairtrade label.

The ethics committee wrote to Fairtrade emphasising the important benefits it could bring to small-scale miners, and the rank and file of the jewellery profession. Pointing out that the majority of jewellery consumers are unaware of its existence, and calling on Fairtrade to invest into the national marketing of Fairtrade Gold to the British Consumer. They were confident that this would add real ethical value to the trade’s standing. Feedback from consultations also showed that Fairtrade could exert considerable leverage on the rest of the supply chain to source responsibly.

Lastly, whilst it is accepted that traceability means extra costs, it was felt that a premium of 10%, over continually rising gold prices, effectively priced this valuable gold product out of the market. Most importantly, addressing this would also make the market even more accessible to miners who have worked hard to fulfil their own ambitions.

In 2011, World Gold Council figures showed that world gold demand was approximately 4,500 tonnes. Of this, 43% was used for jewellery; 10% for technology; 37% for Investment; and 10% for official sector purchases. 70% of that demand was met from primary sourced gold. The balance – of 30% – was met from recycled gold. Scrap gold plays an important partin the UK, but there is still a significant hole to be filled by Fairtrade gold.

Britain still supports many small workshops and retailers. They find it difficult to comply with new regulation. Equally, small scale miners around the world, who are reliant on the success of the UK industry, and access to our markets, need support to achieve the changes we ask of them. Our aim should be to ensure that British businesses are at the forefront of positive and sustainable global change and that certified Fairtrade gold miners share that success!

Michael Hoare