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Demand Driven Ethics


May 10, 2013 3:00 AM   By Avi Krawitz
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RAPAPORT... The diamond industry should be encouraged by new initiatives to enhance the integrity of ‎the global supply chain, not be threatened by them. Therefore, criticism of the April 30 ‎meeting in Paris to discuss responsible supply chains for precious stones was premature ‎and misguided when voiced at this week’s World Diamond Council (WDC) meeting in Tel ‎Aviv.‎

While participants in the WDC meeting — though not all — recognize the limitations of ‎the Kimberley Process (KP), many were also quick to dismiss the new group that ‎gathered in Paris at the Organisation for Economic Co-operation and Development ‎‎(OECD). ‎

Their two biggest complaints, it seems, were that the group did not include ‎representatives across the supply chain — notably, the African producer countries — and ‎that it might be colonial in nature. ‎

‎“The OECD continues to operate in an unhealthy marginal way for us, doing things ‎without us. So it will never be a relevant organization for us,” Susan Shabangu, South ‎Africa’s minister of mineral resources told the WDC meeting. “It needs to be inclusive of ‎us. Gone are the days of being about Africa without Africa.”‎

Representatives of the diamond manufacturing sector and the bourses echoed her ‎sentiment. But they miss the point. The meeting at the OECD was about the global ‎consumer, not Africa. But more on that later.‎

It’s also not the first time that members of the trade have tried to nip a demand-focused ‎ethics initiative in the bud before it’s given a chance. They cried foul at being excluded ‎when U.S. jewelers introduced the Diamond Source Warranty Protocol in October 2012 ‎and dismissed that positive campaign that did not place additional expectations on them. ‎

This time, they were in fact involved. While the Paris meeting was sponsored by Signet ‎Jewelers and Jewelers of America (JA), and co-hosted by nongovernmental ‎organizations (NGO’s) Global Witness and Partnership Africa Canada (PAC), attendees ‎included representatives of the Diamond Manufacturers and Importers Association of ‎America (DMIA), the Antwerp World Diamond Centre (AWDC) and the Dubai Multi ‎Commodities Center (DMCC), among others. The WDC, the industry’s representative at ‎the KP, was invited but was not officially represented. Several members of the WDC ‎were there in an individual capacity, mining companies among them. Representatives ‎from the Rapaport Group also attended.‎

David Bouffard, Signet Jewelers’ vice president of corporate affairs who is heading the ‎facilitation of the new group, clarified a number of potential misconceptions about the ‎Paris meeting to Rapaport News.‎

He stressed that the group was not an OECD initiative. Rather, the purpose of the Paris ‎meeting was to explore whether the OECD was the correct forum for the group to ‎discuss responsible supply chains for precious stones. In order to work within the OECD ‎framework, the group needs to meet certain criteria, Bouffard explained.  In the same ‎way that the KP is built on a tripartite approach, consisting of industry, government and ‎civil society, the new group believes it is important to emulate that structure.‎

Bouffard added that the group – which is called the precious stones multi-stakeholder ‎group - continues to recruit new members, a process it began well before the meeting ‎with an open, non-exclusive, industry-wide and non-commercial approach. ‎

He also stressed that it is not looking to compete with existing programs. “Some ‎participants believe there is a need for on-going and continuous improvement in ‎responsible sourcing practices due to evolving risks with which the trade in precious ‎stones may be associated, regarding conflict and human rights abuses,” Bouffard said. ‎‎“[This] should complement, not replace or undermine other existing initiatives such as the ‎KP.”  ‎

In contrast, the WDC is struggling with its agenda. Participants at this week’s meeting ‎noted a lack of substance to the proceedings. The highlight of the meeting was the ‎signing of a memorandum of understanding to establish a permanent administrative ‎support mechanism for the KP. With its sole focus on the KP, the WDC has become ‎dependent on the KP, which itself has become stagnant in addressing the ethical ‎challenges facing the diamond and jewelry industry today. ‎

The WDC is at a crossroads with interim president Avi Paz taking office after 13 tireless ‎years of Eli Izhakoff at the helm. The organization is also examining its financing and ‎membership structures. ‎

In fact, the WDC needs to undertake a strategic review. The organization’s annual ‎meeting this week left more questions than answers regarding its function: What in fact is ‎its role? What is its place in the responsible sourcing discussion? Are its goals relevant to ‎the challenges facing the industry today? Who is the WDC accountable to? And who ‎does it represent?‎

The failure of the KP to address human rights abuses and ethical issues facing the ‎industry, limiting its activity to its outdated definition of conflict diamonds, has made new ‎initiatives such as the meeting at the OECD, and other programs such as the ‎Responsible Jewelry Council (RJC), necessary. By default, the same applies to the ‎WDC despite its support to change the definition. Retailers need more. As Bouffard ‎noted, “Consumers have expectations of a retail brand and they should have our ‎assurances to meet that expectation, wherever they purchase their jewelry, when it ‎comes to product integrity.” ‎

As this column has stressed in the past, retailers are unable to give those assurances by ‎relying only on the KP, or their representation in the WDC (see editorial, Inevitable ‎Diamond Ethics, published on October 19, 2012). ‎

As a result, what was lacking in the WDC meeting was recognition of the key role played ‎by the consumer. While it is absolutely vital to focus on development issues in Africa and ‎elsewhere, the industry can only play an effective role in that sphere if it is able to ‎guarantee consumer confidence.‎

Sentiment that African producer countries are more important than the consumer, ‎expressed more than once at the WDC meeting, is not a good slogan for the diamond ‎industry. Ultimately, ethical considerations are demand driven and African producer ‎countries, along with members of the WDC, should take note that they stand to benefit ‎from such campaign. ‎

Martin Rapaport, chairman of the Rapaport Group who boycotted the WDC meetings ‎had this to say, “Diamond buyers have the right and obligation to protect their legitimate ‎interests by ensuring that the products they buy are free of human rights abuses and ‎reputational risk. The WFDB and WDC are advised to pay careful attention to the ‎legitimate needs of their customers.”‎

Frankly, customers are more important than suppliers.‎

The writer can be contacted at

Follow Avi on Twitter: @AviKrawitz

This article is an excerpt from a market report that is sent to Rapaport members on a weekly basis. To subscribe, go to or contact your local Rapaport office.

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Tags: Avi Krawitz, Conflict Diamonds, diamonds, Rapaport, Signet Jewelers, World Diamond Council
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