Tiffany & Co.: How the jewelry supply chain can impact and be impacted by climate change.
Tiffany & Co.: How the jewelry supply chain can impact and be impacted by climate change.
Tiffany & Co.’s product requires mining of diamonds and metals, which is traditionally known for its labor intensity and adverse effect on the environment. In a world where luxury consumers are becoming increasingly interested in the sustainability of the products they purchase (Cumenal, 2017), it’s important for a luxury brand to establish a point of differentiation, particularly as it relates to their response to climate change. Additionally, widespread information through digital media make it imperative not only to communicate sustainability as a value, but to demonstrate commitment to combatting climate change through proactive and concrete actions.
Tiffany & Co is vertically integrated, which allows to trace the provenance of its diamonds and metals as well as monitor and control the manufacturing process and overall supply chain (Cumenal, 2017). Additionally, over a decade ago, Tiffany & Co. was one of the first companies to stop using coral in jewelry; coral is one of the species most affected by climate change, potentially having a deadly effect in oceanic ecosystems (United Nations News Centre, 2017). On the subject of oceans, Tiffany & Co.’s Chief Sustainability Officer highlights that climate change is a key priority because rising tide and inclement weather can lead to disruptions in distribution and shipping of products (Hepler, 2015).
Tiffany & Co. has elected to centralize R&D, design, manufacturing, and supply chain teams in New York City in order to be more effective (Cumenal, 2017). This enables Tiffany & Co. to be more innovative throughout the supply chain and adapt in a way that embeds sustainability throughout the value chain of Tiffany & Co.’s products, rather than treating sustainability as a siloed corporate function.
Tiffany & Co. has committed to reducing greenhouse gas emissions to net-zero by 2050. One way the company is achieving this is by LEED certifying manufacturing facilities. (Cumenal, 2017). LEED certifications are one of the most widely used rating systems of green building, ensuring that facilities comply with a series of measures that combat energy and resource use, thereby combatting climate change (United States Green Building Council, 2017). A study by researchers at the University of California – Berkeley found that LEED certified buildings result in up to 50% reductions of green house gas emissions (Mozingo, 2014). So far, only Tiffany & Co.’s facility in Vietnam is LEED certified. There is ample opportunity for the company to expand this effort to its facilities in Belgium, Botswana, and Mauritius (Cumenal, 2017).
One of the hallmarks of Tiffany & Co.’s expressed commitment to environmental and social responsibility has been the formation of the Responsible Jewelry Coalition with other jewelers (Hepler, 2015). But the coalition’s work has not been without criticism. A report by the Canada-based advocacy organization Mining Watch asserts that the certification process lacks proper governance, transparency, and clear standards. Furthermore, the group claims that certifications can be misleading to consumers, since jewelry companies can selectively certify specific facilities and exclude others (MiningWatch Canada, 2013).
While there is insufficient information available to me to verify the claims by MiningWatch, I do think Tiffany & Co could do more to combat climate change. Tiffany & Co.’s CEO highlights vertical integration major success factor in combatting climate change. However, the company does not mine its own minerals and metals (Cumenal, 2017). Hence, Tiffany & Co. claims sustainable practices throughout the later stages of the supply chain while ignoring one of the primary contributors to climate change: the mining itself. Tiffany & Co. is in a unique position to be influential of their early stage diamond supply and mining practices.
Even for supply chain processes within Tiffany & Co.’s control, there is more to be done. On the manufacturing side, it’s pointed out above that LEED programs could be expanded to other manufacturing facilities beyond the current one in Vietnam. Additionally, changes can also be made closer to the consumer, since Tiffany & Co. operates 312 retail stores world-wide (Tiffany & Co., 2017). By investing in energy and resource efficiency measures, the company can reduce its overall GHG footprint and also capitalize on overall energy savings in the long term.
Given more data, it would be interesting to validate the claims by MiningWatch and consider a path forward for the mining portion of Tiffany & Co.’s supply chain. Given that other major jewelers such as Cartier and Rio Tinto are members of the Responsible Jewelry Coalition (Hepler, 2015), I would expect that an industry-wide approach could be effective. Additionally, I wonder what additional innovations could be made in the manufacturing process to reduce energy and resource intensity and further drive reductions in environmental impact. If Tiffany & Co. is to meet its goal of net-zero footprint by 2050, I don’t believe their current small and incremental changes will be sufficient.
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References
Cumenal, F. (2017, March-April). Tiffany’s CEO on Creating a Sustainable Supply Chain. Retrieved from Harvard Business Review: https://hbr.org/2017/03/tiffanys-ceo-on-creating-a-sustainable-supply-chain
Hepler, L. (2015, July 28). Tiffany & Co.’s new CSO on cleaning up the jewelry supply chain. Retrieved from GreenBiz Journal: https://www.greenbiz.com/article/tiffany-cos-new-cso-polishing-jewelry-supply-chain
MiningWatch Canada. (2013, May). How RJC Certification Fails to Create Responsible Jewelry. Retrieved from MiningWatch: https://miningwatch.ca/sites/default/files/more-shine-than-substance-final.pdf
Mozingo, L. E. (2014, October 24). Quantifying the Comprehensive Greenhouse Gas Co-Benefits of Green Buildings. Retrieved from Center for the Build Environment, University of California – Berkeley: https://escholarship.org/uc/item/935461rm
Tiffany & Co. (2017). Shareholder Information. Retrieved from Investor – Tiffany & Co.: http://investor.tiffany.com/faq.cfm
United Nations News Centre. (2017, January 9). Climate change will lead to annual coral bleaching, study predicts. Retrieved from United Nations Sustainable Development Goals: http://www.un.org/sustainabledevelopment/blog/2017/01/climate-change-will-lead-to-annual-coral-bleaching-study-predicts/
United States Green Building Council. (2017, November 15). LEED. Retrieved from US Green Building Council: https://new.usgbc.org/leed
Photo Credit: Tiffany & Co. (2017). Retrieved from Tiffany & Co.: http://tiffany.com/
It seems like Tiffany & Co has set ambitious goals for sustainability, but isn’t really “walking the talk” yet, particularly upstream the value chain. In order to have a stronger impact, Tiffany needs to prioritize sustainability beyond its LEED certifications and R&D relocation. A significant budget needs to be properly dedicated to optimizing and innovating in the diamond supply chain in order to remain competitive. One of its direct competitors, DeBeers, announced last May a pilot plan to store carbon dioxide in diamond-bearing rocks to offset carbon emissions (https://www.reuters.com/article/us-anglo-american-debeers-carboncapture/de-beers-pilots-plan-to-store-carbon-dioxide-in-diamond-bearing-rock-idUSKBN18024T). With increase awareness about corporate responsibility amongst customers, Tiffany needs to set up its game if it wants to stay relevant in the diamond industry.
I share your sentiments on the impact of Tiffany’s sustainability policies, and also question the impact claimed by existing initiatives. Most notably LEED certifications which the firm has utilized as a scorecard have recently been called to question. Most recently, papers have highlighted issues with the LEED rating method, for instance its failure to account for the building’s performance over its projected life. Moreover, few academic studies have examined the process of LEED self-reporting and scoring within a professional setting, even though contingencies such as common business practices and human limitations clearly affect a project’s LEED score. In light of this I would encourage Tiffany to be more ambitious with its initiatives, whilst critically assessing the scorecards it utilizes.
Wonderful article on how an iconic jewelry company is dealing with sustainability and climate change issues. As a recent purchaser of a diamond engagement ring, I was fascinated by the inner workings of the diamond industry. Historically, De Beers dominated the world diamond market, boosting demand by encouraging lavish engagement ring purchases and tightly controlling supply to optimize pricing. In the 1990s, De Beers lost its stronghold given new diamond mine discoveries and increasing competition, particular from ALROSA, Russia’s state-owned diamond company. (https://www.economist.com/blogs/graphicdetail/2017/02/daily-chart-19) While increased competition has benefited consumers, one must ask if it is now more difficult to encourage the diamond supply chain to embrace a sustainability agenda? As miners compete for low cost mines, is there any incentive to add cost to create more sustainable diamond-mining practices? Do consumers actually care or demand this? Are they willing to pay for this?
My own view is that customers don’t and won’t care about the jewelry supply chain for the considerable future. While the “blood diamonds” campaign successfully raised awareness about diamonds mined in war-torn nations, it is unlikely climate change implications will create similar visceral reactions. Indeed, so many marketing dollars are spent in the jewelry industry to create the image and lifestyle of wearing jewelry, there is little mental bandwidth to venture behind the marketing curtain and explore where these stones and metals actually came from. A third party watchdog can change this by raising awareness, but as this article illustrated, most of these watchdog reports lack academic rigor to pack a real punch.
While I applaud Tiffany’s initial steps to make its operations more sustainable, I have to agree with Lynn that as of now, Tiffany’s bark is worse than its bite when it comes to climate initiatives. In fact, the Responsible Jewelry Council (RJC) co-founded in part by Tiffany’s has come under scrutiny over how effective its standards and practices really are for ensuring sustainable diamond sourcing (https://www.theguardian.com/sustainable-business/responsible-jewellery-council-ethical-standards). In fact, criticism of RJC makes me wonder how committed Tiffany’s actually is to living out the sustainable values the consumers of its luxury products are demanding. If Tiffany’s were truly dedicated to the cause, I believe we would be seeing seismic shifts in its sourcing and supply chain. Given that mining operations are the biggest culprit in Tiffany’s operations, a potentially obvious move for Tiffany’s would be to make a sizable investment in lab-grown diamonds. Somehow, though, I don’t think this is likely.
I agree with you Tiffany set its sustainability target but has done little so far in terms of real actions. Companies in such business with leading market share and high bargain power along the value chain should assume more responsibilities in environmental issues. Tiffany can implement sustainability standard easily on its suppliers and make positive influence on the whole industry. I am skeptical that LEED programs may have side effects or other implications which have slowed down the construction process.