11th May 2010 KAURI Workshop on Human Rights The dynamics of Corporate Social Responsibility in challenging times with a focus on Human Rights By Iris Van der Veken Manager Corporate Affairs Global Chair of UN Global Compact Network Belgium

AGENDA 2 Some background information about the diamond industry About Rosy Blue Our CSR Business Model Challenges ahead Q&A

BACKGROUND INFORMATION DIAMOND INDUSTRY 3

Taking a responsible stand in increasingly challenging times 4 Complex Supply Chain from mining to retail Protecting the integrity of the supply chain is a priority What is the future of beneficiation? Yes, the industry has had major issues and still has issues, like any other industry. The key question is: What are we doing about it?

Taking a responsible stand in increasingly challenging times 5 Conflict Diamonds: 1990’s in Sierra Leone and the Democratic Republic of the Congo Zero Tolerance Policy towards diamonds Close Cooperation with the UN, Governments and NGO’s to create the Kimberley Process Certification System was formally adapted in 2003 KP members account for approximately 99,8% of the global production of rough diamonds The System of Warranties was developed by the World Diamond Council to extend the Kimberley Process conflict free assurance of polished diamonds

Key Initiatives Mining ExportImportPolishingManufacturing Retail Kimberley Process Certification System of Warranties Source: 6

Taking a responsible stand in increasingly challenging times 7 What is the status today? Venezuela has voluntarily suspended exports and imports of rough diamonds until further notice Cote d’Ivoire is currently under UN sanctions and is not trading in rough diamonds Marange Diamonds

Initiative of the Responsible Jewellery Council 8 May 2005, 14 organizations from diamond and gold jewellery business came together to form the Council for Responsible Jewellery Practices. At present, the Responsible Jewellery Council is an international not-for-profit organization, bringing together 200 members out of the jewellery supply chain across the globe. Purpose: striving to promote responsible, ethical, human rights and social and - environmental practices in a transparent and accountable manner throughout the supply chain to reinforce the consumer’s and stakeholder’s trust in responsible products. Certification System, based on compliance with the principles of the UN Global Compact, but specifically for the diamond and gold jewellery supply chain.

9 RJC Membership

HOW ROSY BLUE ANTICIPATES AND IS COMMITTED TO TAKE A LEADERSHIP POSITION IN CSR BEST PRACTICES 10

Rosy Blue in the diamond supply chain Global sales 2008 $1,8bn 11

Our global presence - 14 countries USA Belgium Armenia Israel UAE India Sri Lanka South Africa Hong Kong Russia China Japan Thailand Luxembourg 12

Employment to 10,000 people 13

14 Our Stakeholders Auditors Trade associations Media Building trust with our Stakeholders Employees Business partners Financial institutions Industry institutions Local communities Customers Governments

Our Suppliers 15

OUR APPROACH TO CSR 16

Core Values A CCOUNTABILITY I NTEGRITY D IVERSITY 17

Family Philosophy CompassionChild careHealthcare Ahinsha (non-violence) TruthEducationConservation Equal rights Valor Female participation & integration Religion 18

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C RITICAL consumers Diamonds are an ever lasting symbol of LOVE – EMOTIONS – TRUST It provides store of VALUE C ONTINUED CONSUMER CONFIDENCE in our products is essential It’s all about doing things RIGHT ! Within every change there is an opportunity for dynamics 22

Diamonds and intangible value 23 Our today’s ACTIONS will BUILD tomorrow The Industry has EVOLVED in the last decade CONFLICT DIAMONDS – that inflicted human pain – 180 degrees turn around – ongoing continuous investment to improve practices The Industry can take PRIDE in its ACHIEVEMENTS At a very early stage RB REVIEWED all our business activities and processes. Today: throughout the supply chain we are adopting MODERN ETHICAL STANDARDS

J UNE 18 TH WE PRESENT OUR SECOND CSR R EPORT WWW. ROSYBLUE. COM 24

Rosy Blue Commitment General CSR Initiatives UN Global Compact Industry wide Initiatives Responsible Jewellery Council Proprietary Corporate Initiatives Rosy Blue Internal CSR Model Best Practice Principles Business Excellence Model Wal-Mart National Laws and Regulations International Laws and Regulations Kimberley Process & System of Warranties C ONSUMER C ONFIDENCE Voluntary Initiatives O NGOING C OMMITMENT 25

Key Initiatives Business responsibilities Social responsibilities Environmental responsibilities Product integrity 26

De Beers Best Practice Principles Rio Tinto Business Excellence Model Wal-Mart Responsible Jewelry Council United Nations Global Compact Rosy Blue Compliance model Key Initiatives 27

Signifying our COMMITMENT to operate in RESPONSIBLE and SUSTAINABLE manner United Nations Global Compact R OSY B LUE SIGNS UN G LOBAL C OMPACT

What is the United Nations Global Compact? The United Nations Global Compact is the WORLD ’ S LARGEST VOLUNTARY CORPORATE CITIZENSHIP INITIATIVE which is committed to aligning the operations and strategies for all type of organizations with the UNIVERSALLY ACCEPTED PRINCIPLES of the UN covering HUMAN RIGHTS, ENVIRONMENTAL PROTECTION, LABOUR STANDARDS AND ANTI - CORRUPTION. United Nations Global Compact 29

United Nations Global Compact Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights, and Principle 2: Businesses should make sure they are not complicit in human rights abuses. Human rights Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: Businesses should uphold the elimination of all forms of forced and compulsory labour; Principle 5: Businesses should uphold the effective abolition of child labour; and Principle 6: Businesses should uphold the elimination of discrimination in respect of employment and occupation. Labour standards Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: Businesses should undertake initiatives to promote greater environmental responsibility; and Principle 9: Businesses should encourage the development and diffusion of environmentally friendly technologies. Environment Anti-corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery. 30

A CTIONS : J UNE 2008: R OSY B LUE SIGNED THE UN G LOBAL C OMPACT December 10th 2008: Rosy Blue supports the 60 TH ANNIVERSARY OF THE U NIVERSAL D ECLARATION OF H UMAN R IGHTS April 29th 2009: 2008 CSR Report is SUBMITTED as COP (Communication on Progress) on the UN Global Compact site May 1st 2009: R ECOGNIZED as COP United Nations Global Compact 31

A CTIONS : O CT 2009 TO NOW : Active participation with UN Global Compact in New York on exchanging knowledge – Rosy Blue case on the Leaders Summit S INCE F EBR 2009: Member of the Human Rights Working Group/ Chair of the UN Global Compact Network Belgium J UNE 2010: Leaders Summit in New York United Nations Global Compact 32

Key Milestones of our CSR Journey Oct 2007:CSR S TRATEGY DECISION by the CEO and Group Associates Establishment of the G LOBAL C ORPORATE A FFAIRS D EPARTMENT Dec 2007:I NTERNAL CSR SYSTEM in place (planning program, content-supporting standard documentations) Seminar in Sri Lanka: system training for the appointed local dedicated CSR-AML COMPLIANCE OFFICERS. Jan 2008:CSR INFORMATION MANAGEMENT SYSTEM goes live. Start ON - SITE INTERNAL PRE - AUDIT VISITS. Jan-Apr 2008:Implementation of CSR system according to STRICT TIMELINE. Apr- Jun 2008:I NTERNAL DOCUMENTATION REVIEW. Jun 2008:Participant of the UN G LOBAL C OMPACT. May 2009:F IRST R OSY B LUE G ROUP CSR REPORT. 33

Key Milestones of our CSR Journey Dec 2009:Pilot Project R ESPONSIBLE J EWELLERY C OUNCIL Jan 2010:Member of the S UPPLY C HAIN M ANAGEMENT W ORK G ROUP headed by U MICORE Febr 2010: Member of the H UMAN R IGHTS W ORKING G ROUP 34

35 Global Corporate Compliance Team Local CSR-AML Compliance Officers North America (1) Europe (3) Africa (2) Asia (9) Global Corporate Affairs Committee (5) Manager Corporate Affairs Global CEO Executive Management Group Associates Global AML Compliance Manager Global Corporate Affairs Department (4)

Strengthening the compliance model FOLLOW UP REPORTINGCOMMUNICATION & IMPLEMENTATION PLANNING Continuous follow up Rosy Blue CSR Strategy Dedicated Group Associates & Group Executive Mananagement Implementation of Corrective Actions Rosy Blue Standards Report to the Group Associates & Group Executive Management Corrective Actions Global Corporate Affairs Department Documentation review + Pre ‑ audit on ‑ site Implementation Local CSR-AML Compliance Officers Global Corporate Affairs Department Annual CSR Report Answer Compliance Questions Follow up on Legislation Collect Data & Statistics Organize Seminars & Training Sessions Top down Bottom up Communication Develop Training Manuals Develop & Update Policies & Procedures External Communication 36

37 CSR information management system

Key Performance Indicators Quantifiable and measurable results Environment Long term strategy CSR Business Partners Workplace Health & Safety Community 38

CSR VISION announced CSR EXTRANET developed across the Group I NTERNAL CONTROL SYSTEM through documentation review and pre-audit on-site visits M EMBERSHIP UN G LOBAL C OMPACT Rosy Blue E- TRAINING A CADEMY established 39 Main achievements in

A CTIVE INVOLVEMENT in RJC S TRONG AWARENESS programme on HEALTH & SAFETY S TART AWARENESS programme ON ENVIRONMENTAL IMPACT R EVISED C ODE OF C ONDUCT and all policies and procedures CSR TRAINING across the Group 40 Main achievements in

E XTERNAL CSR A DVISORY B OARD established –Mr. Thomas Leysen Chairman Umicore, Chairman of the Federation of Enterprises in Belgium –Baron Luc Bertrand, Chief Executive Officer, Ackermans & van Haaren –Mr. Sonjoy Chatterjee, Director, ICICI Bank –Mr. Tony Phillips, Former Chief Executive Officer, Barloworld R EVIEW MEETING A PRIL 3 RD External CSR Advisory Board – UAMS – CEO, COO, CFO Rosy Blue F IRST CSR REPORT R OSY B LUE G ROUP published May 4th COP U NITED N ATIONS 41 Main achievements in

Internal CSR audits INTERNAL ON-SITE AUDITS BELGIUM USA ARMENIA CHINA HONG KONG THAILAND SRI LANKA RUSSIA SOUTH AFRICA INDIA ISRAEL JAPAN UAE ON-SITE INTERNAL AUDITS  Company tour + checklist  Process & procedure control  AML procedure  Know Your Customer procedure  Cash transactions procedure  Business records relevant to AML/CFT compliance  Kimberley process and System of Warranties procedure  Declaration on invoices  Disclosure procedure  Procedure to contractors  Employment practices  Health & Safety practices  Human Rights practices  Open communication  Environmental Practices  Documentation review: supporting documents  Interviews with Management and staff  Training records  Conclusion audit  Corrective Actions  Follow up 42

Internal CSR audit reporting PLANNING CSR Corporate Extranet Group Associates Develop & update Policies & Procedures CSR initiatives Global Corporate Affairs Department Collect Data & Statistics Follow up CSR Market Information Facilitation by local CSR-AML compliance officer Upload supporting documents Verification documentation by Corporate Team Compliant Corrective actions Pre-audit visits Offices & factories Report to Group Executive Management Report to Group Executive Management & Group Associates Follow up Legislation Training, Research & Development Follow up on corrective actions Final report issued by Group Associates Compliant Corrective actions External audits Report to Group Executive Management Report to Group Executive Management & Group Associates Follow up on corrective actions Final report issued by Group Associates Group Associates review PRE-AUDIT REPORTING MANAGEMENT REVIEW 43

External CSR audits by SGS BELGIUM USA ARMENIA CHINA HONG KONG THAILAND SRI LANKA RUSSIA SOUTH AFRICA INDIA ISRAEL JAPAN UAE CSR AUDITS ON-SITE ASSESSMENT 2005/ INF 2 INF 3 INF CSR AUDITS EXTERNAL DESKTOP REVIEW 2005/ INF 5 INF 1 INF 2 INF 4 INF 1 INF 44

“Rosy Blue have been an active participant of the BPP programme since its inception in N O MATERIAL BREACHES HAVE BEEN FOUND TO DATE and they are COMPLIANT with the requirements of this programme, having taken PROMPT ACTION to close out any issues found in our sample assessments.“ Mrs. Effie Marinos CSR Solutions Manager - EAME 45 SGS

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ROSY BLUE CASE: IMPLEMENTING HUMAN RIGHTS 47

48 China Case ACTIONS Appointed LOCAL LEGAL COUNSEL : Allen & Overy Shanghai P REPARATORY MEETINGS – conference calls – local Compliance Officer – Global Corporate Affairs Department – lawyers to agree upon planning and implementation of the new legislation P RE - AUDIT VISITS on regular basis to focus on implementation and ongoing guidance June 29th 2007 the National People’s Congress adopted the long-awaited China Labour Contract Law (LC Law), effective as of January 1st 2008

49 China Case MAIN CHALLENGES Finding the RIGHT BALANCE beween the interpretation of the local legislation on a national and local level T RAINING all staff on changes in their contract and explaining the working regulations Training in COMPLIANCE

50 China Case OUR APPROACH Regular visits to ENCOURAGE COMMUNICATION and TRUST between all the parties involved T OP DOWN – BOTTOM UP approach

SUPPLY CHAIN MANAGEMENT CSR IN ACTION 51

Innovative Approach to sustainable Supply – Israel Case Practical steps to Supply Chain Sustainability From Suppliers Burden to Inspiration 52 Main sources A Practical Guide to Continuously Improving Upstream Impacts by Applying the Global Compact Principles (draft 19 April 2010) – Unchaining Value: Innovative approaches to sustainable supply – UNEP – Business in the Community – Case input from Umicore, Belgacom, Solvay and Rosy Blue

We define supply chain sustainability as the management of ENVIRONMENTAL, SOCIAL, and GOVERNANCE impacts that result from or are affected by a company’s DIRECT spend with suppliers, AND INDIRECT IMPACTS in the upstream supply chain from material inputs, manufacturing, and distribution 53 Definition

54 What steps can my company take?

To CREATE, PROTECT, AND GROW LONG-TERM ENVIRONMENTAL, SOCIAL, AND ECONOMIC VALUE for ALL STAKEHOLDERS involved in bringing products and services to market. Where a supply chain typically refers to the chain of suppliers inputting to a final product, value chain also encompasses thinking ABOUT THE VALUE CREATED BY THE CHAIN, particularly to end consumers. 55 Objective of supply chain sustainability

56 Long –term viability for your business At every stage in the life- cycle of specific products there are social and environmental impacts, or externalities, on the environment and on people. In addition, governance, or the accountability of organizations to their stakeholders for their conduct, is important at every stage and throughout the supply chain.

Stronger supplier relationship to deliver added-value, ensure reliability, enable innovation and provide sustainable stories Drive down costs -better working conditions reduce turnover and improve quality and reliability Mitigate risks –risks legal /operational/ reputational) are anticipated and managed, costs reduced and productivity enhanced Access to investments 57 Why is it important?

Corporate brand and consumer confidence are protected and enhanced- Secure license to operate in certain communities C ommunities, C onsumers and Shareholders benefit Uncover innovative new approaches to develop products and services Sharing the risks and rewards 58 Why is it important?

Underestimating consequences Failing to anticipate local community and opinion former perceptions of environmental and social impacts Media- campaigns and lawsuits Hard operational consequences such as disruption to supply, increased cost and lack of key raw material Unforeseen costs 59 So just opportunities? NO!!!! – CHALLENGING PROCESS

Evaluate the business case for action ! Understand the external landscape. Identify the highest priority supply chain issues for your company Evaluate risks and opportunities Build the internal support to move forward Develop policy Integrate throughout the procurement process Report externally and internally 60 Getting Started on Supply Chain Sustainability

61 Build your business case Managing Business Risks Realizing Efficiencies Creating Sustainable Products Business Drivers for Supply Chain Sustainability  Reduce cost of material inputs, energy, transportation  Increase labor productivity  Minimize business disruption from environmental or labor problems  Protect company’s reputation and brand value Governance, Management, Transparency  Meet evolving customer and business partner requirements  Innovate for changing market

Opportunities to partner with others, and the expectations of stakeholders Benchmarking against Peer Companies Understanding the expectations of the stakeholders 62 Understanding the External Landscape

CHALLENGES AHEAD 63

Time of global ECONOMIC UPHEAVAL and UNCERTAINTY Eventhough we are in TOUGH ECONOMICAL TIMES and facing enormous PRESSURE TO CONTROL COSTS, we will CONTINUE TO MOVE FORWARD in compliance – CSR IS A LONG TERM ENDEAVOR Q UANTIFIABLE and MEASURABLE results Challenges Ahead

A major challenge is to WORK CLOSELY with ALL OUR STAKEHOLDERS throughout the SUPPLY CHAIN to focus on CSR and EVOLVE to sustainable development. Together we can achieve a more SUSTAINABLE FUTURE W E WELCOME YOUR FEEDBACK ROSYBLUE. COM Challenges Ahead

Q UANTIFIABLE and MEASURABLE results A major challenge is to WORK CLOSELY with ALL OUR STAKEHOLDERS throughout the SUPPLY CHAIN to focus on CSR and EVOLVE to sustainable development. Together we can achieve a more SUSTAINABLE FUTURE W E WELCOME YOUR FEEDBACK ROSYBLUE. COM Challenges Ahead

Be the CHANGE you want to see in the WORLD Mahatma Gandhi 67

Thank you 68