What the Big Jewelry Chains Said About Conflict Minerals

As the result of section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, public companies have had to file reports over the last month disclosing whether they use conflict minerals, which are defined as minerals emanating from the Democratic Republic of the Congo (DRC) or its nine adjoining countries. Gold is considered a possible conflict mineral, as is tungsten, tin, and tantalum. 

This section affected companies from a variety of sectors—not just jewelry—and sent a lot of companies scrambling to find out more about their supply chains. Now, there is no law against using conflict minerals from the Congo, but the idea behind the legislation is that companies wouldn’t want the PR black eye that comes from publicly announcing that their materials could possibly be contributing to a war. 

As you will see, there was a wide range of responses to the disclosure requirements: Some enthusiastically embraced the challenge of compliance, but most seemed to regard the whole thing as a burden. (NGO Global Witness has already slammed the filed reports as “inadequate,” though it didn’t single out jewelry.)

Here is a summary of filings for the main public jewelry companies: 

Signet’s filing can be seen here. The company’s submission is probably the most extensive, and it is the only company that wanted to talk about it. It is also seemingly the only jewelry company that backed up its filing with independent auditing. 

The company did find out that two of the materials in its products came from what the law calls “the covered countries”—some gold and some tin. But spokesman David Bouffard says he’s proud that Signet didn’t take the knee-jerk reaction of asking suppliers not to source from those regions, which many companies have done in response to Dodd-Frank. Instead, it determined that since those items weren’t produced in conflict areas, they could be termed DRC conflict-free. (Signet’s filing explicitly uses this term, even though it didn’t have to.) 

“That is the level of detail we have come to understand throughout our supply chain,” Bouffard says. “We wanted to demonstrate to governments and civil society groups like the Enough Project that responsible sourcing could occur from the affected areas.”

The submission came from many months of working with suppliers, he says. “When we first started this program with the idea of tracking gold, people said it couldn’t be done. There was a great deal of skepticism toward the idea of sharing information, of collaborating with others. But what we learned is that everyone has an inventory-control system and a paper trail.”

Figuring out the origin of their materials didn’t cost suppliers a lot, he adds, with the biggest expense being the independent auditing. “You are talking about a day’s fees that might add up to a thousand dollars or so,” he says. “I don’t think we had any supplier that said this was an exorbitantly expensive project…. I’m proud to say we didn’t lose a single supplier.”

After putting its gold-sourcing protocols into practice, Signet is now working on diamond suppliers about similar protocols for them—though Bouffard says, “Obviously, melee has to be treated differently.” The key, he says, is the collaboration between supplier and retailer: “This wouldn’t have been possible without our suppliers and the collaboration that they exhibited.”

Tiffany & Co. has the second most detailed filing. After doing a review of its vendors, the home of the little blue box determined it had “no reason to believe” that 13 categories of its products—including bracelets and earrings—contain conflict minerals, but for another five categories (including watches), the provenance was undeterminable. The report concludes that it needs to do more to “mitigate the risk” that conflict minerals are entering its supply chain and work more with its vendors. 

Birks Group said that after questioning vendors, it believes that they don’t use conflict minerals—although it couldn’t determine the origin of materials from “three small suppliers, who provided less than one percent of [our] product.” It “intends to expand its due diligence to include new suppliers and implement steps that will improve upon the information gathered during the due- diligence process.”

Charles & Colvard reported that it asked refiners to certify their gold comes from either: London Bullion Market Association–accredited refiners; manufacturers with certified conflict-free gold; or scrap or recycled gold. About 97 percent of its supplies fall into those categories, it said.

Blue Nile’s filing says that it educated suppliers about the rule and then asked them to attest “to the best of their knowledge” that their products do not come from the countries in question. Based on this, it “does not have reason to believe the Covered Goods used in its products may have originated in one of the Covered Countries or is otherwise from recycled or scrap sources.”

One assumes that the people at Zale Corp. had other things on their mind in the last month than filing a conflict minerals report, because its filing is pretty bare bones, especially compared to Signet’s, its new owner. It states that its suppliers have assured the company that they do not use conflict minerals, but argues that since it doesn’t do any contract manufacturing, it isn’t required to file a report.  

Other public companies that sell jewelry that had to file reports: Berkshire Hathaway, Macy’s, and J.C. Penney.

JCK News Director