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Tiffany Details Diamond, Metals Purchasing

Tiffany & Co. last year bought over 80 percent of its serialized diamonds either directly from a mine, or from a supplier that only sources from known mines, the company said in its first annual corporate responsibility report.

In the report, Tiffany said it buys diamonds only from countries that are full participants in the Kimberley Process, a system created to stop the flow of conflict diamonds.  It sources most of its diamonds directly from mines in Australia, Botswana, Canada, Namibia, Russia and South Africa, and Tiffany subsidiary Laurelton Diamonds cuts and polishes these stones.

According to the report, the silver, gold and platinum used in Tiffany & Co.’s workshops (all of which are located in the U.S.) come from two principal sources: in-ground, large-scale deposits of metals that have been responsibly mined, and metals from recycled sources. Of the silver Tiffany bought for its own manufacturing, 68 percent came from the Bingham Canyon Mine in Utah as a by-product of an open-pit copper mine. The remaining 32 percent came from recycled sources. Its gold came 64 percent from Bingham and 38 percent from recycled sources.

According to the report, Bingham produces gold as a by-product of copper mining using a non-cyanide leaching extraction method. Tiffany says that there are legacy environmental issues that result from over a century of mining at Bingham Canyon, but that the mine’s owners deserve recognition for acting responsibly and aggressively to address these issues.

In 2010, Tiffany made 65 percent of its jewelry at its U.S. manufacturing facilities. The company also works with third-party vendors that independently source silver, gold and platinum, and use these to make finished goods for Tiffany.

These vendors participate in the Tiffany & Co. Social Accountability Program, pledging to uphold standards for environmental and social responsibility. Tiffany says it is working with its vendors to supply them with precious metal from the same sources that the company itself uses.

In the report, the jeweler said there are certain places where mining should not take place. In 2010 Tiffany fought the proposed Pebble Mine gold and copper operations in Bristol Bay, Alaska with a full-page ad in National Geographic magazine.

The company has also refused to use coral in its jewelry since 2002.

Tiffany says it can trace the source of all leather it uses, at least to the tannery, and is working to further traceability.

The company has implemented a multi-phase supply chain assessment consisting of self-assessments, internal audits and third-party audits. During the Fiscal Years 2010 and 2011 cycle of third-party audits, 23 percent of all vendors were classified as high-risk, determined by vendor self-assessment, industry and geographic location.

In FY10, Tiffany audited 50 percent of the high-risk suppliers, with 95 percent of these audits conducted externally and 5 percent by Tiffany internal audit teams. The remaining high-risk suppliers were either terminated in Fiscal Year 2010 or have audits planned in Fiscal Year 2011.

Last year, 100 percent of eligible materials in Tiffany’s iconic blue bags and gift boxes were made with materials certified by the Forest Stewardship Council, and more than 83 percent of the box materials originated from post-consumer recycled sources. Its catalogs used over 99 percent FSC-certified materials and at least 10 percent post-consumer recycled content. Tiffany says the fiber-based packaging it uses contains between 60 and 90 percent post-consumer recycled content.

The company says it works to limit the number of catalogs it produces and mails. It has participated in the Catalog Choice program since 2008, allowing customers to control the catalogs they receive.

The company says it is on track to reduce its greenhouse gas emissions by 10 percent per square foot from 2006 to 2011, with FY10 emissions 9.2 percent below 2006 levels. Tiffany says it achieved these cuts through lighting retrofits, the installation of energy recovery ventilators and heating, ventilation and air conditioning improvements.

The company completed its first global inventory of Scope 1 (direct) and Scope 2 (indirect) GHG emissions for Fiscal Year 2010, including the emissions from more than 230 stores and boutiques, two warehouses in New Jersey, manufacturing facilities in New York and Rhode Island and six diamond division facilities. Last year it installed 629kW of solar power, and sold renewable energy credits from an existing 1.3 MW of solar power across two distribution facilities in New Jersey.

In 2010, Tiffany also began a process to enhance the collection of environmental data from its global facilities. This includes the global collection of waste and water data.

Tiffany engaged PricewaterhouseCoopers to provide limited assurance on select metrics in the report. Future reports will show progress and year over year performance comparisons, the jeweler says.

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