This 20-minute presentation for Tiffany & Co. CEO Michael Kowalski underscored the brand's commitment to issues of sustainability.

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PRESERVING THE (RETAIL) ENVIRONMENT: SUSTAINABILITY IS GOOD FOR BUSINESS

There’s a lot of talk out there these days about preserving the environment, about sustainable practices, about respecting the planet. Tiffany & Co. believes very strongly in this movement and we’re doing everything we can to contribute, including printing on 100% post-consumer-waste paper using environmentally friendly soy-based inks. But we’ve got to draw the line at green boxes—ours will remain the iconic blue.

It may initially seem like a bit of a disconnect that I have chosen to speak on this particular subject. Tiffany & Co.—arguably the world’s ultimate luxury brand—is famous everywhere for extravagant jewels, lavish stores and luxuriously printed catalogs (not always on 100% post-consumer-waste paper). “What,” you may be asking, “can he have to say about sustainability?”

Let me warn you that I’ve got about twenty minutes’ worth of remarks on the subject. And let me also preface them by saying that, although we have made strides, there is still a long way to go. Mostly I just want to tell you why I think sustainability makes sense and share with you my first-hand experience of what can be achieved within the parameters of a luxury business. With some examples of what Tiffany has accomplished alongside other leaders in the jewelry industry and some non-governmental organizations, I hope to encourage you to consider the possibilities for change that exist within your own industry.

I would first ask you to consider what Tiffany contributes that does not readily meet the eye: the deeply resonant emotional role we play in people’s lives. Imbued with sentiment, enriched with meaning, delivered with a sincerity of gesture—it is talismans of love for which Tiffany is perhaps best known. More than likely, they have played a role in your own story: the silver baby’s rattle; the diamond engagement ring; the gold watch for years of service. Tiffany is honored to create these objects that are cherished, passed from one generation to the next. These are the things that inspire, that matter, that last.

Our brand exists as an ambassador of good will. Sincerity and authentic feeling reside at Tiffany’s very core. Our customers expect us to deliver Holly Golightly’s fairytale perfection, a world where nothing bad can ever happen, and we want to make their dreams come true. This drives our commitment to being good citizens of the earth. We owe it to our customers—and to the earth itself.

Nature has been an ongoing source of inspiration for Tiffany & Co. Since 1837, the beauty of flora and fauna has been a signature motif of our designs—you can see it in the work of Schlumberger, of Elsa Peretti, of Frank Gehry. It is in keeping with our brand vision to protect the beauty of the natural world. The notion of sustainability—of the timelessness, the respect and the love it represents—is actually central to our identity.

But what can one little luxury brand hope to accomplish? When you hear about the magnitude of the crisis (we continue to lose 2,000 trees a minute in the Amazon; 40% of our waterways are no longer potable), the problem seems overwhelming. It’s tempting to go back to just making pretty things that make people happy—and let’s not underestimate the value of that. But knowing what our customers expect of us compels us to make a difference where we can. In the 21st century, when corporations have surpassed government in terms of resources and yes, even in power, it is up to them—to us— to take an active part in public safety and in protecting our natural environment. The onus is now on us to develop smarter, more efficient and more sustainable practices.

Of course you may say that luxury companies are by definition more accountable because they have greater resources to draw upon. And that the lion’s share of the responsibility lies with those of us who are more often in the spotlight. Tiffany is at the pinnacle of its industry and so attracts a fair amount of scrutiny. Perhaps you are thinking that our visibility is what forces us to adopt certain positions. And you would not be entirely wrong. These issues do land on our doorstep first and it is not out of pure altruism that we address them. Our prominence invites NGOs to target us first, so it serves us to be proactive. But the brand values that keep our customers loyal had us advocating for environmentally sound practices long before it was necessary, much less fashionable.

Tiffany has long recognized the challenge of mining, processing and crafting precious materials in ways that are environmentally sound and socially responsible. We feel that our best hope of success lies in clearly understanding the origins of all these materials, and affecting the process from the mine to the showcase.

More than a decade ago, we took the lead in working toward the eradication of trade in conflict diamonds. In 1999, we were founding members of the World Diamond Council, an industry group that works with NGOs, governments and civil society to eliminate the smuggling of diamonds out of war-torn countries by those seeking to finance violence. We were instrumental in the implementation of the Kimberley Process Certification Scheme, an international cooperative monitoring system created by NGOs that tightly controls the import and export of rough diamonds to ensure that we don’t deal in conflict diamonds. We urged members of Congress to support legislation that enabled this, and in 2001 we advertised our stance in the Washington Post. We continue to buy diamonds only in countries that participate in the Kimberley Process. It’s a system that works, although not perfectly, and we would like to see it further strengthened. We are encouraging the development of control standards for every participating country, more rigorous compliance monitoring and the implementation of transparent, auditable systems. In 2003, we created Laurelton Diamonds to help ensure the integrity of our supply chain of diamonds. This wholly owned subsidiary procures rough diamonds and manages the worldwide supply chain that cuts, polishes and supplies finished stones to Tiffany.

We are also actively investing in alluvial diamond mining projects that seek to improve conditions for artisanal miners who are often operating with only the most basic hand tools. With over a million such miners reportedly working in Africa, Tiffany would like to support these employment- and revenue-generating operations while also helping to improve social conditions and minimize environmental impact. As part of this effort, we are working to supply ground-penetrating radar technology to artisanal miners to aid in identifying potential diamond deposits with less land disturbance.

Tiffany has a long—and some might say colorful—history with the mining industry. As far back as 1995, we expressed concern over plans for the development of the New World Mine and its potential threat to Yellowstone Park. We sent letters to that effect to the Secretary of the Interior, the mine developers and mining industry associations. (And here, in the spirit of full disclosure, I think I’d better admit to being passionate about nature. I was brought up in New Jersey but I’ve got a real thing for Big Sky country, and I have a personal stake in preserving the great outdoors—although it can be argued that this is true for most people. Some members of my staff have been known to remark that in a parallel universe, I would be employed as a park ranger!) Over the years, we continued to speak out about changes in federal mining regulation and urged reform of the General Mining Law of 1872, an archaic statute signed into law by President Ulysses S. Grant and designed to allow miners to stake claims on the vast public lands that once constituted the Western frontier. Now that law protects multinational mining companies defacing federal property to extract billions of dollars in gold and other minerals without paying any royalties.

At Tiffany, we even put our money where our mouth is! In 2002, we assessed a “responsible mining royalty” of 2.5% of the purchase price of gold and silver sourced in the U.S. and began contributing it to environmental preservation and restoration projects in mining communities. The following year, we were one of several organizations that convened a conference on responsible mining. It was attended by NGOs, retailers, investors, insurers and technical experts, all of whom were seeking to identify best practices. One result was the publication of the Framework for Responsible Mining: A Guide to Evolving Standards, with the goal of advancing productive debate and encouraging conclusive action by governments, retailers, civil society and the mining industry.

In 2004, we shocked the mining industry and the Bush administration with another ad in the Washington Post, this time an open letter addressed directly to the Chief of the U.S. Forest Service. It asked for protection of the Kootenai National Forest in Montana threatened by the controversial Rock Creek silver and copper mine, and for reform of the previously mentioned General Mining Act of 1872. The Rock Creek mine was slated to tunnel under the Cabinet Mountain Wilderness Area, just upstream from Idaho's famous Lake Pend Oreille, discharging up to three million gallons of waste water a day into the Clark Fork River. The Forest Service claimed it had no choice but to allow this, and so endangering grizzly bears and polluting precious water resources.

Tiffany was not alone in its objections. Some 60 Idaho panhandle businesses, as well as county commissioners and city council members, also opposed the Rock Creek Mine.
But this was the first time that a major jewelry company had been so outspoken in calling for reforms to mining regulations and it made a big impact. It was a wakeup call indicating that the greater business community was ready to take a stance in opposing outdated mining practices. We can’t deny that gold mining is a nasty operation but it is essential to our business, so we have a social duty and a moral obligation to do what we can to improve it. It seems to me that what we are advocating can simply be called common sense: air and water contamination must be minimized; new mines should not be developed on lands of high ecological or cultural value; basic human rights must be respected; mine operators must be responsible for the cost of cleaning up and closing mines; and mine wastes should not contaminate rivers, streams, lakes or nearshore ocean waters.

This past November, the House passed the Hardrock Mining and Reclamation Act of 2007. The bill put a stop to granting patents for mining claims, imposed a royalty of 4% of gross revenues on existing mining extracting from unpatented mining claims, and placed an 8% royalty on new mining operations. Mining of private mineral rights would not be affected. 70% percent of the royalty money would go to a cleanup fund for past abandoned mining operations, and 30% would go to affected communities. Definitely a victory, but unfortunately it doesn’t end there. The bill is expected to face opposition in the Senate. Senate Majority Leader Harry Reid opposes imposing royalties on existing mines. Senator Barack Obama opposes the bill in its current form, but would consider compromises. The Bush administration has threatened to veto the bill. But I can say with conviction that our efforts did not go unrewarded. We were able to team up with like-minded organizations and citizens and bring a great deal of awareness to this important issue. And the next time I saw the Chief Ranger in Washington, he gave me my very own highly coveted Smokey the Bear patch!

What I have outlined for you are merely steps on the road to a perfect process. Is the system as flawless as a Tiffany diamond? Sadly, no. Above all, I have come to see that most industries need third-party certification systems because it’s virtually impossible to create and impose standards alone. A few months ago, an AP reporter called me with a real “gotcha!” situation. This journalist had met and followed a child soldier who mined gold for a Swiss company, and allegedly traced some of it to Tiffany products. It was impossible to deny this outright as, despite all our efforts, the supply chain is still so complex. No single party can shoulder all the responsibility: there needs to be an alliance between governments, trade organizations and a financially disinterested party representing civil society to agree on best practices.

So this move towards sustainability is truly a group effort, one in which, sooner or later, we must all become involved. Maybe you don’t think your customers care about these issues right now, but they surely will. Awareness is growing exponentially and accountability is becoming essential for businesses big and small. Customers are looking beyond the end product, examining sourcing and digging deeper to find out about corporate philosophies. Our society’s linear system clearly does not work on a finite planet so it’s time for every company to start creating solutions. This is yet another expression of your brand, another chance for you to communicate shared values to your customers.

You may think, as I originally did, that unless you’re prepared to go all the way you’d better not make a move. Perhaps you’re afraid that if you stick a toe in the water, the NGOs will drag you kicking and screaming into the deep end. But I think you’ll be pleasantly surprised at the great value placed on every effort. Make no mistake about it, Tiffany does not fit the definition of a “green” company, yet we have not remained in the shadows because of this—and we have found that the NGO community does not want us to. It has chosen not to focus on our shortcomings but to embrace us for the work that we can do.

It’s not necessary to launch your involvement with a big, glamorous gesture. Just think about what changes you can make in your immediate sphere. But don’t be generic in your efforts: consider what’s unique to your business, concentrate on your area of expertise. And remember that you can’t do it alone! Get together with others in your industry, go to Washington and form allegiances there, combat lobbyists that oppose legislation you support by contributing to the other side. It may sound a little intimidating, but it gets easier as you go and you’ll realize how deeply satisfying, how incredibly necessary it is to become part of this system of change. This past year, on the 135th anniversary of the enactment of the General Mining Act of 1872, I went to Capitol Hill and spoke in support of Mining Reform legislation. It was a historic moment for me, and one that I was proud to be part of as a representative of Tiffany and on behalf of all our customers who expect us to do the right thing.

This, above all, is what has made Tiffany & Co. such an enduring brand: our customers trust us with their futures. We create the precious mementoes that are cherished over time; the special keepsakes that will be handed down. And it is our mission to leave behind a world every bit as beautiful and complete for the generations to come.