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Shine Than Substance More Shine Than Substance HOW RJC CERTIFICATION FAILS TO CREATE RESPONSIBLE JEWELRY MAY 2013 A report by: TM EARTHWORKS Mining Watch Canada Mines Alerte More Shine Than Substance HOW RJC CERTIFICATION FAILS TO CREATE RESPONSIBLE JEWELRY MAY 2013 A REPORT BY: Earthworks www.earthworksaction.org IndustriALL Email: [email protected] www.industriall-union.org Tel: 202-887-1872 E-mail: [email protected] 1612 K Street NW, Suite 808 Phone: + 41 22 304 1845 Washington DC, 20006 20, Rue Adrien Lachenal USA 1207 Geneva Switzerland MiningWatch Canada www.miningwatch.ca Construction, Forestry, Mining and Email: [email protected] Energy Union (CFMEU) Tel: 613-569-3439 www.cfmeu.com.au 250 City Centre Avenue, Suite 508 Phone: + 61 2 9267 1035 Ottawa, Ontario K1R 6K7 PO Box Q1641 Canada Sydney NSW 1230 Australia United Steelworkers www.usw.ca Email: [email protected] Tel: 416-487-1571 234 Eglinton Avenue East, 8th floor Toronto, Ontario M4P 1K7 Canada This report is based on publicly available information sources. It is believed to be accurate but does not purport to be complete. TM EARTHWORKS Mining Watch Canada Mines Alerte Table of Contents TABLE OF CONTENTS ..............................................................................................................3 LIST OF ACRONYMS ................................................................................................................5 RJC DOCUMENTS REFERRED TO IN THIS REPORT .....................................................................6 EXECUTIVE SUMMARY ...........................................................................................................7 INTRODUCTION ................................................................................................................... 14 1 FLAWED GOVERNANCE AND PROCESSES .......................................................................... 15 1.1 GOVERNANCE ..................................................................................................................... 15 1.2 STANDARD DEVELOPMENT PROCESS ................................................................................. 16 1.3 CERTIFICATION PROCESS .................................................................................................... 17 2 MEMBERSHIP AMBIGUITY ............................................................................................... 19 2.1 RJC CERTIFIED MEMBERSHIP CLAIMS MISLEAD CONSUMERS ........................................... 20 Selective Certification and Verification............................................................................. 20 LOOPHOLE Mines Not Under Member “Control” Do Not Require Certification ............. 22 LOOPHOLE Facilities Not Actively Contributing to Supply Chain are Excluded ................ 23 3 WEAK CODE OF PRACTICES (CoP) ..................................................................................... 25 3.1 FAILS TO RESPECT THE RIGHTS OF INDIGENOUS PEOPLES ................................................ 25 3.2 FAILS TO REQUIRE MEANINGFUL COMMUNITY ENGAGEMENT ........................................ 27 Does Not Require or Verify Early Engagement ................................................................. 27 Fails to Require Consent or Support from Affected Communities ................................... 29 3.3 ALLOWS INVOLUNTARY RESETTLEMENT OF AFFECTED COMMUNITIES ........................... 33 3.4 FAILS TO REQUIRE PUBLICATION OF PAYMENTS TO ALL GOVERNMENTS ........................ 34 3.5 LACKS DUE DILIGENCE FOR MINING OPERATIONS IN CONFLICT ZONES ........................... 35 Conflict Diamond Loopholes ............................................................................................. 37 3.6 FAILS TO PROTECT WORKERS ............................................................................................. 38 Narrow View on Human Rights ......................................................................................... 39 Weak Provisions on Child Labor ........................................................................................ 39 Allows Members to Do Business with Suppliers Using Forced Labor ............................... 41 Expresses Weak Support for Trade Unions ....................................................................... 42 Applies Minimal Protections for Worker Health and Safety ............................................ 44 Contains Weak Discipline and Grievance Procedures ...................................................... 45 Fails to Require Worker Input on Acceptable Working Hours .......................................... 45 Does not Require Members to Provide a Living Wage ..................................................... 46 No Worker Protections Related to Retrenchment ........................................................... 47 No Protections Related to Fly-in, Fly-out Mining Operations ........................................... 49 3.7 FAILS TO PROTECT THE ENVIRONMENT ............................................................................. 49 Does Not Place Limits on Water and Air Pollution ........................................................... 49 Does Not Seriously Address Toxic Mercury ...................................................................... 50 Fails to Protect Natural Water Bodies from Tailings Dumping ......................................... 52 Fails to Protect Biodiversity .............................................................................................. 54 MORE SHINE THAN SUBSTANCE: HOW RJC CERTIFICATION FAILS TO CREATE RESPONSIBLE JEWELRY 3 Fails to Address Water Consumption ............................................................................... 56 Fails to Address Energy Consumption and Greenhouse Gas Emissions ........................... 58 4 LIMITED CHAIN-OF-CUSTODY REQUIREMENTS ................................................................. 60 4.1 CHAIN OF CUSTODY LOOPHOLES ....................................................................................... 61 Conflict-sensitive Sourcing Loophole ................................................................................ 61 Mined Material Loopholes ................................................................................................ 63 Gold Byproduct Loophole ................................................................................................. 64 Recycled Material Loophole ............................................................................................. 66 Grandfathering Loophole .................................................................................................. 67 Platinum Loophole ............................................................................................................ 67 Inadequate Tracking of Bullion ......................................................................................... 68 Outsourcing Contractor Exemption .................................................................................. 69 4.2 PROVENANCE DEFICIENCIES ............................................................................................... 70 4.3 NO CHAIN-OF-CUSTODY TRANSPARENCY .......................................................................... 71 4.4 MISLEADING CHAIN-OF-CUSTODY CONSUMER CLAIMS .................................................... 72 5 AUDITING DEFICIENCIES .................................................................................................. 74 5.1 LACK OF TRANSPARENCY AND ACCOUNTABILITY .............................................................. 74 5.2 NO REQUIREMENT FOR STAKEHOLDER INVOLVEMENT IN AUDITS ................................... 76 The critical role of unions is not recognized ..................................................................... 79 5.3 NO PEER REVIEW OF AUDIT REPORTS AND RECOMMENDATIONS .................................... 80 5.4 LACK OF INDEPENDENT ACCREDITATION OF AUDITORS ................................................... 80 6 INADEQUATE COMPLAINTS PROCESS ............................................................................... 82 6.1 COMPLAINTS ADJUDICATION COMMITTEE NOT BALANCED ............................................. 82 6.2 COMPLAINTS SYSTEM NOT TRANSPARENT ........................................................................ 82 6.3 COMPLAINTS SYSTEM INACCESSIBLE ................................................................................. 83 7 CONCLUSIONS ................................................................................................................. 84 8 APPENDIX: CASE STUDIES ................................................................................................ 85 1. CASE STUDY – RIO TINTO’S RUSHED CERTIFICATION ......................................................... 85 2. CASE STUDY – RIO TINTO’S OYU TOLGOI PROJECT ............................................................ 86 Exempted from RJC Review .............................................................................................. 86 Fails to Meet RJC Community Engagement Standards ..................................................... 87 Fails to Meet RJC Standard/Guidance on Resettlement ................................................... 89 3. CASE STUDY – RIO TINTO’S SHARE OF THE GRASBERG MINE ............................................ 90 Rio Tinto’s share of production revenue: 40 percent ....................................................... 90 Grasberg is one of the world’s most environmentally
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