RJC Small Business Sustainability Toolkit

The Responsible Jewelry Council (RJC) mission is a responsible worldwide supply chain that promotes trust in the global jewelry and watch industry. This can only be possible with more jewelry supply chain actors taking responsibility and implementing responsible practices. For small businesses, it can be difficult to know where to start and what to do in practice. This toolkit provides practical guidance for small and medium sized enterprises on how to implement Corporate Social Responsibility (CSR) in four initial steps.

The RJC is taking important steps to support our members now and into the future to accelerate responsible business practices across the supply chain. In certain countries CSR is now a mandatory requirement with existing legislations and standards on CSR issues such as environment, human rights and labor rights. The jewelry supply chain is complex and composed of diverse supply chain actors, many who are small and medium sized enterprises. These Businesses may want to start their sustainability journey but are unsure where to start and what the business case is for doing so.

CSR presents numerous benefits for businesses regardless of their size such as higher motivation and productivity amongst workers, enhanced reputation and access to global markets. There are different approaches to implementing CSR from fully integrated responsible sourcing practices to contributions towards social and economic development projects. Whichever approach works best for your company, CSR should not be considered as an isolated activity from your core business operations.

With this toolkit, RJC aims to provide practical guidance for small businesses alongside tools and resources to help start your CSR journey. CSR is a process of continuous improvement over time. It is moving your organization beyond compliance and integrating management systems in the areas of human rights, labor practices, sourcing practices, product integrity and environmental impact as part of your core business strategy.

Implementing CSR: About This Toolkit

RJC’s mission is a responsible worldwide supply chain that promotes trust in the global jewelry and watch industry. This can only be possible with more jewelry supply chain actors taking responsibility and implementing responsible practices. For SMEs, it can be difficult for them to know where to start and what to do in practice. This toolkit, provides practical guidance for SMEs on how to implement CSR in four initial steps.

What is CSR and Why Implement It?

CSR is a voluntary action by businesses to take responsibility for the impacts of its activities on society and the environment – going beyond legal compliance. In some countries there has been a progressive approach to include CSR under corporate law and it is becoming mandatory.

There are two key concepts to implementing CSR – responsibility and impact. Understanding and assessing the scope of your business’s responsibility and its impact will help you to develop your CSR program and implement it. By implementing CSR you can also contribute towards the 17 sustainable development goals (SDG). Figure 1 lists the subjects that are considered to be within the scope of CSR activities. They can help you to understand and focus your efforts.

• Human rights: There are two broad categories of human rights: 1; civil and political rights and 2; economic, social and cultural rights. In the context of a business’s responsibility, the list of rights that international guidance documents often refer to is rights that are covered by the International Bill of Human Rights. However, your business’s responsibility might also cover other types such as economic, social and cultural rights protected under the national law where you operate. For further information on human rights (provision 6), look at the RJC website training page: here.

• Labor rights: Labor rights often refers to International Labor Standards and the International Labor Organization (ILO) Fundamental Principles and Rights at Work2. Other issues such as wages, working hours, harassment and abuse, health and safety are often addressed by national laws that have to be considered within the scope of a company’s responsibility. To learn more about labor rights (provisions 15-22), look at the RJC COP 2019 Guidance document: here.

• Environment: Environmental impact might vary depending on business operations, location of the business and availability of natural resources. For instance, production may lead to pollution. The use of chemicals can be harmful to plant and animal life. Mining activities can result in soil erosion, deforestation and air and water pollution. Various issues should be considered such as your companies carbon footprint, methods to prevent pollution (e.g. waste management, disposal of chemicals, recycling, life cycle assessments), sustainable resource use (e.g. water management), and biodiversity. For further information regarding your impact on the environment (provisions 24-27), look at the RJC COP 2019 Guidance document: here.

• General requirements and supply chains: A company is expected to comply with applicable law(s) and regulation(s) related to its operations. Companies are not only responsible for their direct activities but also expected to respect human rights, labor rights and the environment throughout their supply chains. In the jewelry industry, companies are recommended to pay attention to sourcing practices from conflict affected and high-risk areas and implement internationally recognized guidance and standards such as OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High Risk Areas, OECD Guidance Supplement Gold, Kimberley Process Certification Scheme and World Diamond Council System of Warranties. Where SMEs source directly from artisanal and small-scale mining, risks have to regularly assessed and minimized. RJC COP 2019 has specific provisions covering general requirements and supply chains (provisions 1-7).

• Consumer relations: Companies dealing with retail products should provide accurate and transparent information. It is important to disclose information about your product especially within the gold, silver, platinum group metals (PGM), diamond and colored gemstone supply chain as purchasers have a right to make an informed choice. Record keeping is critical especially in the processing stage. For example, information on the 4Cs (cut, color, clarity and carat) should be documented for diamonds to enable accurate and transparent disclosure. Similarly, to comply with the World Diamond Council (WDC) System of Warranties (SoW) diamond suppliers and manufacturers must pass on a warranty statement each time a diamond changes hands – records of these warranty invoices received and issued, must be kept on file. Procedures for and records of ensuring disclosures should be accurate and comply with the law, including sourcing practices, due diligence, regular product testing, inspections and laboratory or testing reports. Consumer relations and product disclosures (provisions 28-30) are key for your customer to trust you, look at the RJC COP guidance document for more information

• Community involvement and development: Companies have close relationships with the communities in which they operate. In most parts of the world SMEs contribute immensely to the economic progress of a country/local community and create jobs. SMEs support social, economic and institutional development of the communities in which they operate by the activities which they conduct such as supporting education and culture, technology development, social investment and community involvement. Working with your communities will benefit all, not just your company, look at how to develop strong communities development (provision 10) with the RJC COP guidance.

When implementing CSR, SMEs should assess their responsibility and impact on their employees, environment and communities. There is a strong link between your sphere of influence and responsibility to act (see Figure 3). Within the three key spheres of influence, sphere one covers the activities you have direct control over such as health and safety of your employees. It also includes your supply chain such as adhering to the national and international product requirements in your trading activities or having full record of your financial transactions. The second and third spheres represent areas where you may have an impact, but you do not have direct control, such as community development. The more influence you have in each sphere, the greater your responsibility is to act.

CSR implementation is a progressive process. You can start by looking at your internal operations (e.g. towards your own employees and inside the company). Internal interventions can be highly visible and have tangible returns in the short-to-medium term. External involvement such as community relations may come later. The priority of areas to implement can also be based on expectations made by your stakeholders. The major stakeholders of SMEs are often the employees and the communities where the business operations are situated, and in some cases business partners/suppliers and retailers. However, other civil society organizations such trade unions, business associations, as public and regulatory bodies are important stakeholders to take into consideration as you develop your CSR plan.

Benefits and Challenges of Implementing CSR

With ever increasing globalization, CSR has become an important and prevalent requirement around the world. Violations against CSR topics such as human rights in supply chains are becoming more visible and consumers, civil rights groups, NGOs, customers and suppliers are increasingly demanding information on production conditions and routes to market.
As an SME, your CSR motives and initiatives may take different forms than those of larger enterprises. You might be concerned about losing your competitiveness by imposing additional conditions onto your suppliers or setting higher standards for your workers than your competitors. CSR may seem difficult to implement. However, there is a business case for SMEs, advantages can be:

• Higher motivation and productivity amongst workers, that decreases turnover rates.
• Enhanced reputation and trust that leads to better access to global markets and investment.
• Enhanced reputation amongst the community, customers, banks and other important stakeholders.
• Optimization of management processes that contributes to better risk management and efficient resource management.
• A long-term vision for the sustainability of the business operations which may eventually increase your competitiveness and client base.
• Attract and retain talent.

Even if you lack the human and financial resources, it is still possible to implement CSR gradually.

Step 1: Preparation

In this section, we guide you through practical steps to implement CSR. CSR should not be considered as an isolated activity from your core business operations. It can be implemented gradually and be integrated into your existing management systems or business practices. Based on your resources and time, you can set up a simple system covering your workplace and expand it to cover your supply chain.

Before you start, it is useful to conduct a basic review of your existing documentation and practices of your organization with your staff to identify the areas where you may already contribute towards CSR. This can include your policies, principles, procedures (e.g. hiring procedure covering age verification, health and safety procedure), certifications, guidelines (e.g. workplace rules handbook), contracts, projects and reports.

If you have a management system in place, it is likely your organization has an inventory of documentation for your management system. In Chapter 3: Tools and Resources, we have provided a simple questionnaire/checklist (see Tool N. 1) that will help you to identify the gaps and take action. While doing this exercise we also suggest for you to:

• Identify your priorities: identify which CSR subjects impacts your business the most and what should be addressed first. A list of CSR issues that you can use as reference is provided in Chapter 3: Tools and Resources (see Tool N. 2). During this exercise it is recommended that you consult with your stakeholders. This does not have to be a complex process; you can call your direct suppliers and business partners and ask what their expectations are. Or use survey tools to understand the expectations of employees or conduct desk-based research on what your competitors are doing.

• Map your existing processes: Review your existing practices and documents to identify which CSR subjects are covered and which subjects have to be addressed. This can include policies, procedures, production records, sourcing materials records, contracts, financial transaction records, employee contracts, human resources or other types of quality guidance documents/ handbooks, codes of conduct and project reports.

• Document your actions: You can integrate your CSR priorities into your existing business practices instead of writing new policies, rules and procedures. For instance, you can integrate your CSR policy into your quality management system. Or you can integrate relevant subjects into your existing management procedures. An example you might already have measures in place to ensure the health and safety of workers, but this is not documented. You can document the current practice, revise it where necessary and include other related practices. You do not need a separate policy and procedure for each CSR subject. Simple sentences reflecting your practices and respecting CSR standards are sufficient.

Transparency and Traceability in Supply Chains: Why it is Important

Transparency and traceability are essential for responsible supply chains. Without knowing where products & materials comes from, we cannot ensure that our operations do not have a negative impact on environment and society. A business should be able to answer questions on its supply chain such as: Where the materials come from? How were they mined? What kind of impact does the mining have on local communities and environment?

Lack of transparency on the origin of materials pose various risks on environmental damage, child labor and forced labor and bribery, money laundering and financing terrorism.

In the jewelry industry, most business relations are built on trust and due to secrecy and security, traceability from mine to retail can be hard to achieve. In some cases, there might be a strong chain of custody mechanism in place because of the type of gemstone, its origins and quality. In others, due to numerous people and transactions, it might be difficult to trace the origin.
To ensure that the business ethics are respected, any actors within the jewelry supply chain have to find and then provide information on the origin or manufacturing process of the materials and the records of financial transaction. SMEs are advised to keep, as minimum, internal inventory and transaction documents to retrospectively identify materials, inputs and outputs for all their sourced jewelry materials, particularly gold, silver, platinum group metals (PGM), diamond and colored gemstones.

That means collecting:

• Information on the form, type and weight of materials input: e.g. for precious stones: the origin of the material, locations where its consolidated before export, method of extraction, weight, transportation route.
• Supplier details including Know Your Counterparty (KYC) information

In practice you can gather this information in several different ways:

• Use checklist and forms, where applicable, to collect information from suppliers
• Collect information directly in meetings
• Depending on the resources available, consider using electronic data management software to help streamline your supply chain mapping and information gathering.

Step 2: Create a CSR Policy

A CSR policy refers to a company’s responsibility towards the environment and people, it highlights the strategic focus areas of responsible practices in their business operations. It is often used to communicate a company’s values and responsible business practices internally and externally. The policy structure and length vary. However, most CSR policies generally focus on three main areas:

1. Objectives and values: Outline the company values and objectives alongside a short statement endorsed by senior management.

2. Legal compliance: Legality and compliance with the law and regulations is part of responsible business practices. Here, companies may refer not only to compliance with national laws but also with international standards or industry guidance. This course of action is mainly taken where the company operates in specific sector, deals with specific materials, is part of a organization (e.g. a trade organization, and industry association) with their own requirements, etc.

3. Business ethics and other areas of emphasis: Business ethics explain the way businesses conduct their operations. The core CSR subjects that it covers are protecting the environment, respecting human rights, promoting labor rights, responsible supply chains, anti-corruption and fraud.

Include key personnel when drafting your CSR policy. Depending on the complexity of your operations and organization size, you can choose to have a short policy and have separate detailed policies covering all CSR subjects. Or you can develop one detailed CSR policy (sustainability policy, sustainability charter, code of ethics) covering all the CSR subjects. The important factor is that you provide commitments for all the key CSR areas. The RJC COP guidance has further information on how to develop and implement your policies (provision 2).

Management Commitment and Assigning Responsibility

Managers and company owners are important drivers of CSR implementation. It is critical to have commitment from the top. The policy also has to be signed and approved by the company owner or senior manager. Depending on the size of your organization, it is also recommended to assign responsible personnel to coordinate the implementation of CSR activities.

Communication

Strategic communication should be targeted to key stakeholders. In the context of SMEs, they are often employees, large buyers or retailers, suppliers, civil society and community organizations. Different communication strategies and tools might be needed to communicate to each type of stakeholder group.

Managing the Change Process: How to Communicate CSR to Your Employees

Integrating CSR into business practices often needs some further work to implement change. Regardless of the context and circumstances, people have a tendency to resist the change. The following tips may help you to better manage the process and communicate:

• Communicate the process from the beginning: Do not wait to communicate with your employee to complete the policy drafting process. Once you decide to implement CSR, explain and share the implementation steps with all your staff with a meeting, announcement or webinar.
• Explain clearly why CSR policy is needed and what you want to achieve to your employees: To successfully promote CSR, you need to clearly explain why it is needed, what are the objectives and how will it impact your employee and affect their work. Building the business case for CSR involves formulating the arguments and rationale behind your engagement in CSR. A holistic overview that is not only looking at the business benefits but also takes into account motivations can be useful. Here, you can explain the possible positive outcomes of CSR or indicate the negative outcomes of not having it.
• Create a leadership team: Depending on the size of your company, assign one or more responsible people who will lead the process and engage with other employees. The responsible person is not required to work on this full time.
• Support dialogue: Ideally, CSR implementation should not be a top-down approach and employee’s engagement should be promoted. This can be done in various ways such as organizing consultations, building on their knowledge and experience with training or workshops. Create opportunities for employees to take part in the consultation process. Using tools such as surveys or interviews will help you to engage with your employees. Explore digital solutions such as online voting and poll tools too sophisticated for SMES – suggest “coffee” or “breakfast” conversations. They provide lots of opportunities for reaching out to many people for consultation purposes without spending too much time and effort.
• Examples of internal communication: Regular employee meetings, posters, brochures in the workplace (in common areas, canteen, entrance etc.) and internal newsletters and key messages by the CEO or owner.

Step 3: Incorporate CSR Into Your Organizational Practices

The CSR Policy is a company commitment to take responsibility of its actions. In practical terms, you need more than a commitment to ensure its implementation, meaning having a system in place to identify your risks, impact and procedures to ensure that you respect responsible business practices. In this section, we will first look at the procedures and how you can incorporate CSR subjects in them and then we will examine the methods for risk management.

Incorporating CSR Into Standard Operating Procedures

If you want to ensure that you respect core CSR subjects, you need to integrate them into your regular operational standard operating procedures (SOP) or create new procedures for subjects covered by CSR. Examples could be:

• Labor rights: Labor rights cover various issues such as equal treatment, forced labor, child labor, freedom of association and collective bargaining, wages, working hours, harassment and abuse, health and safety. Depending on the size of your company, these issues can be covered under an employee handbook, workplace rules or separate procedure. If you employ more than five people and engage in production the following key example issues can also be addressed in the SOP to ensure protection of the employee rights.

– Forced labor: Do not prohibit movement of workers, workers should be free to leave the workplace, due to security reasons if you lock doors or restrict movement between production sites, make sure that workers have access to the emergency exit.

– Child labor: Verify workers age at the hiring stage, take copies of their government issued identification and keep them on file.

– Freedom of association and collective bargaining: Prohibit all types of intervention with workers’ rights to engage with unions.

– Equal treatment and non-discrimination: Prohibit all types of discrimination at the workplace in hiring, promotion and termination. Provide equal pay for equal work for men and women.

– Wages: Adhere to the national minimum wage requirements. Do not withhold workers’ wages and pay wages regularly.

– Overtime: Overtime should be voluntary. Working time should not pass the national legal working hours limits.

– Health and safety: Workers should be provided with necessary protective equipment, conduct risk assessments and address hazards. Other measures such as first aid, fire safety, emergency procedures should be implemented.

• Environment: Depending on your operations, you might have different impacts on the environment. Issues such as the use of natural resources, waste management and how to mitigate the negative effects can be addressed by in the procedures.

Risk Assessment

In order to mitigate or prevent negative social and environmental impact, first you need to identify your risks in the whole supply chain. The risk management process can be initiated with supply chain mapping. Key steps include:

• Listing all products and services you purchase, produce, provide and export.
• Identify the country where each product was manufactured.
• Determine what the main raw materials are for composite products and/or semi-finished products, and where they come from.

In the jewelry industry, risks can be found at different levels of the supply chain: high risk of human rights, and environmental degradation in the upstream supply chain where the precious stones and minerals come from, health and safety risks in the middle of the supply chain (cutting & polishing), child labor in ASM. Knowledge of the supply chain and transparency are key features of CSR, because without linking the source with the product we cannot ensure that all CSR principles are respected.

There exist different types of risk factors based on the characteristics of the product, activities and suppliers such as:

• Risk related to countries/location and materials: Damage and risks are diverse based on the material type. For instance, mercury and cyanide in gold extraction are harmful to plant and animal life while gemstone mining is relatively less hazardous since chemicals are not used. However, all types of mining activities may cause deforestation, erosion, found in protected areas/fragile biodiversity and may involve child labor or dangerous working conditions. Risks may also be related to the origin of the material. Some countries can be riskier due to weak law enforcement (e.g. if the land rights are unclear/not established), poverty, vulnerable state institutions, political instability and high rate of informality. There are online resources providing information on each country’s overall performance on CSR as well as on particular subjects such as corruption, labor rights and human rights.

• Risk related to characteristics of the suppliers: Characteristics of the suppliers such as lack of management systems, informality and relationship with the supplier (leverage, longevity of the business relations, contracting types, payment practices) also determines the risk level and what to look for. For example, issues related to community rights and environmental degradation can be more commonly observed in large scale mining operations.

For more information you can refer to the RJC Risk Assessment Toolkit that can help you to identify the risks and mitigate them in your supply chain, and Tool N.2 (in Chapter 3: Tools and Resources) will help you pre-assess risks related to materials and suppliers. It can help prioritize your work by assigning risk levels, high, medium and low to your risk assessment. Focus your work on high risks first as they are more likely to occur and have a greater impact than a low risk and then work your way down through to your low risks.

Develop an Action Plan

Once you identify your policy, and risk areas, the next step is to come up with an action plan (see table 1) to implement your CSR program. This includes documenting actions to reduce/manage risks and prevent negative impacts of your business on the environment, labor and human rights or minimize their harm.

For each identified issue or risk, you need to come up with:

• Set of activities: which actions are you planning to take to address the risks?
• Responsibility: who should be responsible to complete the actions and monitor the results? Depending on the size of your organization, set up a cross departmental working group with leadership commitment at the top to develop a strategy.
• Timeline: what is the deadline for completing the activities?
• Results & verification: how will you monitor the results? How will you verify that the action has been completed?

Use Networking and Collective Action to Address Complex Issues

Most supply chain issues are deep rooted and complex. It is very unlikely for a sole company to solve an industry-wide problem such as unclear supply chains, long working hours or corrupted practices. However, SMEs should not underestimate their impact to change practices. They can benefit from a collective approach and networking to tackle these issues together for a greater impact. Collective approaches can be developed either directly with other SMEs or associations. Examples can be:

Supporting industry-led initiatives: In many instances, SMEs lack the leverage to address systemic issues independently. Many of these issues can only be addressed through collaborative industry-wide action. To address common challenges, enterprises can engage in various platforms and share experiences or learn from peers.

• Sharing knowledge and experience on CSR practices.
• Developing a common agenda or workplan for industry-wide problems.
• Collaborating on projects and programs with other industry players to increase leverage on suppliers or get access to funding.

Step 4: Review

Download RJC Small Business Sustainability Toolkit