Responsible Sourcing Policy

Policy Policy approved by: Anna Chevychalova CFO Malakan Diamond Company January 2023

Policy owner: Anna Chevychalova CFO January 2023

Version control: January 2023

Policy review date: Annually January 2023

Policy objective:

The objective of this policy is to set out the commitments by Malakan Diamond Company regarding the responsible sourcing, procurement, trading, and use of key jewelry materials in its supply chain. The company aims to be a trusted and transparent supplier, making continuous progress towards responsible sourcing leading practices. This includes efforts to respect human rights, protect the environment, and ensure ethical business conduct.

Scope and Definitions:

This policy applies to Malakan Diamond Company and all its business relationships in the supply chain. It includes suppliers with whom the company has a contractual relationship, as well as suppliers’ suppliers up to the raw materials level. The policy covers the procurement and use of key materials used in the manufacture of jewelry, including diamonds, colored gemstones, precious metals, and other relevant materials.

Context and reference standards:

The policy is informed by global reference standards such as the United Nations Guiding Principles on Business and Human Rights (UNGPs), the OECD Guidelines for Multinational Enterprises, and the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD DDGs). These standards provide the context and voluntary commitments that the company seeks to adhere to in its responsible sourcing efforts.

Key policy commitments:

  1. The company will not knowingly sell, trade, or use jewelry raw materials that originate from sources involved in conflict, bribery, fraud, money laundering, or the funding of terrorism. This commitment will be disclosed in the company’s sales or purchase documentation and in signed agreements with business partners.
  2. The company is committed to conducting business with respect for human rights and implementing human rights and environmental due diligence across its operations and value chain. It aims to raise awareness, share and expect compliance to its policies, procedures, and standards within its value chain.
  3. The company will disclose the characteristics and any treatments on goods sold to customers. It will not engage in false marketing or communication of its products.
  4. The company reserves the right to require mandatory due diligence and compliance reviews, including third-party audits, to ensure that direct suppliers meet the company’s and industry’s policies and standards.
  5. The company reserves the right to terminate commercial relationships with business partners that fail to meet its due diligence standards or breach its policies. However, the company will first engage with these partners to support and push them to improve their practices.
  6. The company will make efforts to exclude materials originating from sources that carry severe risks to human rights and the environment. It will actively drive and support its supply chain partners to meet global and industry standards.
  7. The company will not buy diamonds from sources that have violated government regulations restricting the trade of diamonds from conflict-affected or high-risk countries.
  8. The company will not buy diamonds from regions subject to legal rulings or advisories indicating the presence of conflict diamonds, unless the diamonds have been exported in compliance with the Kimberley Process.
  9. The company will provide comprehensive and repeated training and information to its employees regarding the sourcing of diamonds, trade resolutions, and government regulations.
  10. The company will ensure that customer invoices include assurances related to the quality, provenance, and adherence to the Kimberley Process.
  11. The company recognizes the risk of conflict diamonds in the supply chain and defines conflict diamonds based on relevant United Nations Security Council resolutions. It maintains an active risk-based exclusion list to mitigate these risks.
  12. The company acknowledges the WDC-SOW as a voluntary system of industry self-regulation and commits to adhering to its guidelines in the sourcing of diamonds.
  13. The company commits to sourcing gold and other precious metals in accordance with the OECD DDGs and the LBMA’s responsible sourcing program. It will undertake annual supplier due diligence assessments based on the requirements of the RJC-COP.

This policy will be reviewed annually to ensure its effectiveness and alignment with evolving industry standards and best practices.