Jewellers and luxury watchmakers are facing growing challenges in obtaining gold and diamonds due to the ongoing conflict in Ukraine. As a result of the war, Russia, the largest producer of natural diamonds and the second-largest gold miner, is now off-limits for these companies. This has led to difficulties in securing raw materials and ensuring that their supply chains do not support human rights issues.
One company that has responded to this conflict is Richemont, the maker of Cartier, which announced in March that it would no longer purchase any diamonds mined in Russia since the invasion on February 24. Richemont has also stated in its sustainability report that it is not buying any recycled gold from Russia, as there are concerns about its origin. Swiss NGO Swissaid has raised concerns about the surge in Swiss gold imports from Dubai and suggested that Russian gold may be finding its way into Western value chains through this route. While no evidence has been found to support this claim, the CEO of Swiss gold refinery Argor-Heraeus has acknowledged that it is possible for gold from Russia to enter Western value chains through Dubai. As a result, Richemont has decided not to buy gold from Dubai due to the challenges associated with the region.
Richemont has set a target to achieve full traceability of the origin of its raw materials, specifically gold, by 2025. Currently, the company sources 94% of its gold through its in-house refinery Varinor, which focuses on recycled gold from industrial sources or old jewellery from North America, Western Europe, and Japan. However, Richemont does not disclose its suppliers. In contrast, Swatch Group avoids using recycled gold from external sources due to the lack of traceability back to the mine. Patek Philippe, a family-owned watchmaker, trusts its suppliers and the regulations set by governments for raw material sourcing. Chopard did not provide any comments on the issue, while Rolex has established its own traceability system for gold, which is certified by external audits.
To ensure the origin of recycled gold, many jewellery and luxury watch companies rely on labels from the Responsible Jewellery Council (RJC). However, these labels have been criticized for their loopholes that allow for the production of recycled gold without proper traceability. The RJC’s Chain-of-Custody (CoC) standard, which is the strictest standard for materials, aims to provide complete transparency from mine to retail. However, only a small portion of the RJC’s members are CoC certified. In recent months, the RJC’s reputation has been damaged as companies like Richemont, Pandora, and Kering left due to its ties with Russia’s state-owned diamond producer, Alrosa. Richemont executives have criticized the RJC’s governance, but efforts are being made to address these issues and maintain the standards that have been developed over the past 15 years.
Despite certifications and labels, experts caution that gold and diamonds cannot be entirely free from ethical concerns due to the nature of mining operations. Dr. Laurent Maeder, a professor at Sustainability Management School SUMAS, has emphasized the environmental and social challenges associated with gold mining. He highlights that even products labeled as fair trade may still have ethical concerns.
In summary, the war in Ukraine has presented significant challenges for jewellers and luxury watchmakers in sourcing gold and diamonds. The industry continues to grapple with issues of supply chain transparency and responsible sourcing, striving to ensure that their products do not contribute to human rights abuses or environmental damage. The ongoing efforts of companies like Richemont and industry organizations such as the RJC underline the importance of responsible practices in the luxury jewellery sector.
Useful links:
– Responsible Jewellery Council
– Richemont Sustainability Report
