The BPP Assurance Programme is a systematic means of monitoring the compliance of the De Beers Group of Companies, Sightholders and, where relevant, their business partners in the diamond industry. It has been developed to provide evidence to supply chain partners, consumers and other interested stakeholders that the exploration, extraction, sorting, cutting and polishing of diamonds, and the manufacture and sale of diamond jewelry by entities that are owned or controlled by the De Beers Group of Companies or by Sightholders, are undertaken in a professional, ethical and environmentally friendly and accountable way.

The Diamond Trading Company (DTC) has therefore made compliance with the BPPs a legally binding condition of its contracts with Sightholders and, wherever possible, with third parties.

This program comprises a management system and set of assessment tools, a key element of which is Self-Assessment using the BPP Workbook.

The Best Practice Principles set out various required standards of conduct with regards to three main areas:

• Business Responsibilities ensure that all operations act responsibly and ethically and in compliance with the law - for example in sales transactions, supply chain management, sourcing of diamonds, interaction with the local community and other stakeholders and overall business relationships. This applies to the practices of every employee at every level.
• Social Responsibilities ensure that business is conducted beyond economic profit and towards generating real social value in the communities in which we operate.
• Environmental Responsibilities ensure all operations adopt the highest standards required by law with regard to their impact on the environment.

The BPP Assurance Programme comprises a framework for the implementation of Self-Assessment and Independent On-Site Verification

Compliance with the BPPs is an integral part of Supplier of Choice. The Supplier of Choice Policy Statement confirms that Sightholders (and any part of their Group) must comply and continue to do so in order to be eligible as a Sightholder. The Supplier of Choice Policy Statement entitles the DTC to refuse to accept applications for, or to sell, or to deliver diamonds if the Sightholder (or any part of its Group) does not comply with the BPPs. Acting in a manner inconsistent with the BPPs and the requirements set out in the BPP Assurance Programme documents can constitute a breach of contract entitling the DTC to terminate a Sightholder’s appointment (i.e. cease to supply rough diamonds).

The BPP Requirements incorporate best practice measuring and reporting standards, such as the standard of Social Accountability International (SA8000) and the Global Reporting Initiative. BPP workbooks are broadly aligned with the reporting guidelines and performance indicators of the GRI, which help to provide assurance to a range of different stakeholder groups. One of the tangible outputs of the BPP Assurance Programme is a report on the business, social and environmental performance of the De Beers Group and Sightholders.

To ensure the integrity and completeness of Self-Assessment Workbooks, Independent Verifiers annually monitor all Self-Assessment Workbooks. The Independent Verifier will follow up reports where data is not submitted (either at all or in incomplete form) and/or where data is not clear. Non-submission of or a failure to complete the Self-Assessment Workbook will constitute a breach of the obligation to comply with the BPPs and could potentially result in sanctions against the defaulting Group.

COMPLIANT

Compliant rating means there are no compliance issues that need to be addressed.

IMPROVEMENT OPPORTUNITY

An Improvement Opportunity is not a compliance issue if a satisfactory solution is found and implemented during the course of an annual Assessment. Improvement Opportunities can also be listed for the record, to assist the Entity towards continuous improvement, or be a limited compliance issue where resolution is beyond the ability of the Entity to resolve (such as instances where various national laws contradict one another). Improvement opportunities do not require a Corrective Action Plan.

MINOR INFRINGEMENT

A Minor Infringement is any compliance issue that can be rectified within a short period and that, if managed responsibly, is not deemed by the Assessors or Independent Verifiers to result in any adverse impact. Minor Infringements may require a Corrective Action Plan.

MAJOR INFRINGEMENT

A Major Infringement is any compliance issue that can be rectified within a reasonable period and that, if managed responsibly, is not deemed by the Assessors or Independent Verifiers to result in significant adverse. Major Infringements will require a Corrective Action Plan with milestones/timelines.

MATERIAL BREACH

A Material Breach is any serious non-compliance issue that contravenes the core BPPs. For the avoidance of doubt, material breaches may include, but are not limited to:

• The use of child labour or forced labour;
• Trade in conflict diamonds;
• Non-disclosure of synthetics, treated diamonds or simulants;
• Money laundering or the financing of terrorism;
• Willful or negligent acts or omissions resulting in serious injury or death;
• Abuse of human rights;
• Non-payment of minimum wages;
• Causing a significant adverse effect to the environment; or otherwise bringing the industry into serious disrepute.

Material Breaches require a Corrective Action Plan. A Material Breach may constitute non-compliance with the BPPs and therefore a breach of Supplier of Choice, and may be dealt with accordingly. If the Corrective Action Plan milestones for Major and Minor Infringements are not achieved, to the Independent Verifier’s satisfaction, the infringement may be excalated to the next level; e.g. a Major Infringement that is not rectified satisfactorily in accordance with the Corrective Action Plan may become a Material Breach.

Please note that the DTC is entitled to terminate its contract with a Sightholder if:

• i. the Sightholder (or any member of its Group) acts in a manner materially inconsistent with the BPPs (i.e. A Material Breach); or
• ii. the Sightholder (or any member of its Group) acts in a manner inconsistent (but not materially so) with the BPPs and fails to remedy the default (if capable of remedy) within a reasonable period (not being less than 20, nor more than 30, business days) of being requested in writing by the De Beers Group to do so; or
• iii. the Sightholder (or any member of its Group) acts in a manner inconsistent (whether or not materially so) with the BPPs, whether or not such default is remedied in accordance with (ii) above more than three times during the term of the Sightholder’s appointment.

As we are DTC Sightholders, we are contractually obliged to abide by the De Beers Best Practice Principles. Since 2005 we have been audited –desktop review on all our entities and on-site visits at certain entities - and have been found compliant to these standards. Further details will be given in this report.