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Elaine Cohen, Exclusive to the Sustainable Business Forum as part of the Reporting: How They Do It series

De Beers was established in 1888. It is the world’s leading diamond company, with unrivalled expertise in the exploration, mining and marketing of diamonds, recovering nearly 33 million carats in 2010. From its mining operations across Botswana, Namibia, South Africa and Canada, De Beers produces and markets approximately 35% of the world’s supply of rough diamonds by value. Together with joint venture partners, De Beers operates in more than 20 countries and employs more than 16,000 people generating revenues of $3.3 billion.

Reporting Period: Calendar year 2010

 

Format:

 

Framework: GRI A+ Application Level including Mining and Metals Sector. Supplement (2010). UN GC cross indexed.

Assurance: External verification of the De Beers Best Practice Principles Assurance Programme (BPPs), Internal auditor statement.

Material issues: Comprehensive materiality assessment and matrix.

 

Special features:

  • Whistleblowing hotline numbers listed for 12 countries.
  • Details of stakeholder feedback on prior report.

 

 

Interesting practices:

  • Partnerships with governments in joint ventures in Botswana and Namibia.
  • Detailed presentation of multi-layered approach to stakeholder engagement.  
  • Detailed description of De Beers Risk Review Process.
  • De Beers has convened an ongoing series of ‘Diamond Dialogues’ since 2007.
  • The Diamond Route -  a cross-provincial, multi-site tourism route that covers nine sites across southern Africa.
  • Good explanation of benefication strategy.
  • De Beers is a founding member of the non-profit Responsible Jewellery Council
  • 3.3 %  of pre-tax profits ($39 million) donated to community causes

Reviewing the De Beers Family of Companies Report to Society for 2010, it is easy to see why this report was honored at the ACCA South Africa Sustainability Reporting Awards for the second year running, being declared the Overall Winner. The De Beers report is a delight to read, it is intelligently structured, well-cut, polished and completely aligned with the report's title "Living up to Diamonds". Reading the statements by the Chairman and Joint Acting CEO's is rewarding – both are focused, factual, forward-looking and frame the report content in a relevant way - a far cry from most of the platitude-ridden clichéd report-speak that features in most opening messages from company leaders. The report is pleasantly designed and has an inviting appeal. Graphics are modestly excellent, for example, a representation of the Jwaneng mine showing the center diamond-bearing core in multiples of the Eiffel Tower provides a reference point for the mine depth in a way we can understand. The photos throughout the report are real images from the De Beers operations and associated activities, and not bought images that could be any company anywhere, which lends authenticity to the report.

De Beers' report is cleanly structured, starting with the company background elements and followed by economic, ethics, employees, community and environment sections. Operating highlights and performance summary are provided early on and present an important backdrop to the remaining disclosures and narrative.  A good deal of contextual and explanatory narrative provides enough background for the reader to understand how De Beers fits into the total scheme of things.

The highlight of this report has to be the Sustainability Risk (Materiality) Matrix.

ImageThis is a matrix-plus, containing far more information than the regular version used by most reporters. Although the axes are reversed (usually stakeholder interests are on the vertical axis and business interests are placed horizontally), the 27 dots on the matrix distinguish between (9) new material issues and those (18) carried over from 2009, and also between long, medium and short term risk. The material issues are company-specific, indicating serious process and not a generic matrix which could apply to almost any company. Most of the issues shown on the matrix are addressed in the report narrative in a detailed way - in each of the core sections of the report, the relevant risks are extracted from the core matrix and the narrative provides an explanation of each risk, De Beers' performance in relation to the risk and, in most cases, future targets. This is a truly robust approach, showing consistency and thoroughness in relation to what matters most and for the reader, great clarity.

The risk which scores highest on the matrix both for business and stakeholders is "Maintenance of health, safety and occupational hygiene standards".  Perhaps this is not surprising because in 2011 there were three fatalities which is clearly a blemish on the De Beers' safety record. This is discussed, as are a wide range of measures implemented to protect employees, including a full survey of health related issues outside the workplace. As with most companies operating in Africa, risks related to HIV/AIDS are also reviewed and De Beers' actions to raise awareness, conduct research and provide treatment are reported.

The diamond industry, of course, is not without controversy and carries a host of critical sustainability issues which extend way beyond operational safety. The whole subject of conflict diamonds has been widely discussed for many years, with the Kimberley Process having been instrumental to regulating this industry out of conflict. De Beers is involved in the ongoing implementation of the Kimberley process and makes the point that all De Beers diamonds are 100% conflict free. De Beers has in place a Best Practice Principles Assurance Programme which applies to De Beers operations and all diamond purchasers (Sightholders). This involves compulsory self assessments by De Beers customers and contractors which are third party audited. Overall, apparently, the Best Practice Principles cover over a quarter of a million people who work in the diamond industry globally.   

ImageResource depletion and long-term sustainability are issues for this industry, and De Beers addresses this with regard to life-extension of mines through technology and investments. Additionally, water consumption for De Beers is a risk, given that many of the company's operations are located in dry and arid areas. One of De Beers' initiatives in this area is a three-year agreement with the Worldwide Fund for Nature (WWF) South Africa to understand and mitigate the company's impacts in the Limpopo river basin in Southern Africa.

The economic contribution of diamonds as natural assets in country geographies is of great significance given the high economic value to certain countries. One of the most interesting features of the De Beers' business model is the existence of JV's that De Beers maintains with local African governments in Botswana and Namibia. This is quintessential sustainability- doing business in a way which makes profit while ensuring distribution of wealth via governments, making governments true stakeholder-partners with a vested interest in the success of the business, rather than distant regulators and policemen. De Beers' joint-venture partnership with the Government of Botswana generates roughly 30% of Botswana’s GDP and half of total Government revenues year-on-year. Operations in Namibia are run by Namdeb, a 50/50 joint venture between De Beers and the Government of the Republic of Namibia. Namdeb is the country’s largest taxpayer, and one of the largest private sector employers.  Diamond mining in Namibia contributes about 8% of the country's GDP. These are significant economic impacts, touching the lives of many populations in these countries, safeguarding many livelihoods. Additionally, De Beers' strategy of benefication – ensuring that value adding activities such as diamond cutting and polishing take place in the countries of source rather than being shipped to remote diamond centers – assist in ensuring a sustainable infrastructure in these diamond producing countries.  

The GRI Index is not included in the main report and is available as a separate download. What is not apparent, however, is the fact that the separate GRI Index document contains several important data tables, which I feel would have been better embedded in the body of the report.

Overall the De Beers' report is, in my view, an example of quality reporting.  I do believe it lives up to diamonds.