From the frozen tundra of Canada to the baking-hot pits of Africa, diamond miners are working hard to clean up their acts — in the most public way possible — as a new wave of scrutiny from both within and outside the trade has put pressure on companies to increase transparency in their sourcing.
“There are many reasons for organizations — not just in the diamond sector, but in all sectors around the world — to put greater focus on issues of responsibility and transparency,” says Stephen Lussier, Forevermark chairman and De Beers Group executive vice president of consumer and brands. “Being a responsible business is the right thing to do morally, and a greater range of stakeholders is voicing the need for organizations to provide them with assurance about responsible actions — whether it’s consumers, bankers, investors, communities, governments, supply chain partners or others, there is a growing expectation [of] assurance.”
As such, the industry is having to improve the ways it can give those assurances. Whereas once a handshake or a promissory note passed up the supply chain was enough to calm the fears of worrywarts, trust is now measured out in uploads to impenetrable blockchain systems where there is nowhere to hide.
Substandard standards?
Jewelry industry watchdogs such as the Responsible Jewellery Council (RJC) and the Kimberley Process (KP) have taken a battering in recent years. Switched-on campaigners have called them out for being too soft on an industry with a dark track record in human rights and environmental issues — whether that record is true or just perceived thanks to the legacy of “blood diamonds.”
In a 2014 article in
The Guardian, ethical jeweler David Rhode of Ingle & Rhode described the KP as “the perfect cover story” for blood diamonds, and Canadian nonprofit organization IMPACT accused it in 2017 of giving buyers “false confidence.” As for the RJC, a 2013
Guardian piece questioned whether it was “an imitation ethical standards body,” and last year, jewelry activist Greg Valerio dismissed it as “a very low self-preferential standard.”
In response, the World Diamond Council (WDC) has expanded the mandate for the KP System of Warranties to include human-rights, anti-money-laundering and anti-corruption criteria. The RJC, meanwhile, released a revised code of standards in April — the third rewrite since the organization’s launch in 2015 — that offers a more comprehensive due-diligence approach
to diamond sourcing.
Elements of the RJC reboot received praise from a collective of nonprofit groups, including Human Rights Watch (HRW) and Civil Society. In an open letter, they welcomed, among other things, the requirement that all diamond suppliers be scrutinized irrespective of membership in the KP. What the organizations found “deeply problematic,” however, was that diamond suppliers would not be required to face third-party audits for human-rights compliance until 2021. “Because certification can be granted for up to three years, this means that some members [who gain or regain certification in 2021 before the changes take effect] may not be fully assessed against the new Code of Practices, including a strategy to respond to identified human rights risks, until 2024, a full five years from now,” it argued.
Pick up the pace
The general party line in the diamond industry when it comes to transparency seems to be “We’re trying, isn’t that good enough?” Yet it lags behind other industries — such as food —
that are delivering supply-chain transparency on items of much lower value.
Even as the World Jewellery Confederation (CIBJO) launched its
Responsible Sourcing Blue Book of ethical guidelines earlier this year, it described the new standards as based on “continuous improvement” — an acknowledgement that even these updates are not yet ideal. For instance, the publication “notably does not demand third-party assessment and certification of responsible sourcing policies, recognizing that at this stage, such a step may be unreasonably burdensome for many smaller businesses,” CIBJO stated in a presentation at the Vicenzaoro show in September.
Some, though, recognize a more immediate need for change. “Now, more than ever, jewelry consumers expect that when they make a purchase, they are buying a high-quality product that has been responsibly sourced,” says David Bouffard, vice president of corporate affairs at Signet Group. As such, making sure the supply chain is “responsible, transparent and sustainable is a strategic imperative, as we can only fulfill our mission to help customers ‘celebrate life and express love’ [the retailer’s slogan] if they trust us to provide fine jewelry that has been sourced and produced with integrity.”
Signet requires all its suppliers to join the RJC over time; it currently sources 94% of its jewels from RJC members. The company also subjects them to the scrutiny of its proprietary open-source Signet Responsible Sourcing Protocol, a set of rules created with input from more than 80 suppliers, associations, customers, governments and banks.
“As the world’s largest retailer of diamond jewelry, we continue to use our influence and position to work for harmonized industry standards,” Bouffard adds.
Elusive origins
A major bugbear in diamond sourcing is that dealers and retailers often cannot share the original source of the diamonds they sell, simply because they don’t know it themselves. The industry has always deemed this an unfortunate inevitability in a global supply chain that scatters diamonds around the world at different stages of production, mixing them into miscellaneous parcels as they go. But this year, there have been some major developments in that area, with several new initiatives aiming to demystify the stones’ geographical origins.
Tiffany & Co. announced plans in January to begin sharing the provenance of its new diamonds, and it intends to add a “craftsmanship journey” by 2020 to show where the stones have been cut and polished. All new diamonds of 0.18 carats and above will have laser-etched serial numbers that unlock this information.
“There should be nothing opaque about Tiffany diamonds,” company CEO Alessandro Bogliolo said at the time. “Our clients want and deserve to know where their most valuable, most cherished diamond jewelry is from and how it came to be.”
Yet those who read on to the small print will find an exception clause: Some diamonds may be given a designation that takes the shine off Tiffany’s Diamond Source Warranty Protocol. “In the case of one trusted supplier with several responsibly managed operations, diamonds may be designated ‘Botswana sort,’” the jeweler explained in its January statement. “The majority of these diamonds were mined in Botswana, as well as in select mines in Namibia, South Africa or Canada. For ‘Botswana sort’ stones, provenance is the above grouping of countries, procured as an aggregated parcel of rough diamonds from a specific, limited group of mines in Southern Africa and Canada.” In other words, they may not be from Botswana.
The Gemological Institute of America (GIA) is also trying to tie diamonds to geographical locations. In April, it launched its Diamond Origin Report service, which confirms a polished stone’s country of origin along with the standard 4Cs. To achieve this, the rough stone must first go to the GIA for testing and to receive a unique ID number, which is then used to match the resulting polished with the data the lab collected on the rough.
This sounds expensive and time-consuming — two things most businesses try to avoid — but the GIA claims there has been interest in the service, leading the lab to expand it to include colored diamonds. “Reaction to the GIA Diamond Origin Report is very positive,” says Tom Moses, the GIA’s executive vice president and chief laboratory and research officer. “There is strong interest in this program from miners, manufacturers and retailers.” It names Alrosa as one miner already on board.
The blockchain solution
Another angle the industry is working on to improve traceability is blockchain — an encrypted digital ledger that creates a virtual map of where a diamond has been, from mine to store.
One of the diamond blockchain pioneers is Tracr, an initiative De Beers is spearheading. Signet was the first retailer to sign up for this program and is currently in the pilot phase, integrating the technology into its protocols. While Bouffard says blockchain is “not a replacement, but rather a complement” to the company’s existing drive for transparency, he believes it will bring more confidence to the supply chain.
On the other side of the world, Hong Kong-based jeweler Chow Tai Fook is experimenting with Everledger blockchain — which is based on the IBM Blockchain platform — for its T Mark diamond jewelry brand. As part of the initiative, which launched last year, it has partnered with the GIA to include grading data in its diamonds’ digital footprints. This will give customers “additional assurance and transparency, and the opportunity to have both diamond grading and diamond traceability information at their fingertips,” says Chow Tai Fook managing director Kent Wong.
Warts and all
Along with being able to name a gem’s country of origin or provide an iPhone-accessible map of the stone’s journey, the diamond industry is gradually recognizing the need for transparency in its day-to-day operations as well. With its history of cloak-and-dagger antics, winning over mistrustful consumers is a challenge. That means it’s time to get confessional, exposing not just the press office-approved positive stats, but also the areas that need improvement.
To that end, the Diamond Producers Association (DPA) published an in-depth report this past May on the financial, environmental and societal costs of diamond mining. Titled “Total Clarity,” the report was compiled by independent researcher Trucost using data from DPA members — a demographic representing some 75% of the world’s diamond production.
It makes for fascinating reading. For one thing, the document doesn’t shy away from presenting the less favorable data alongside the good: In 2016, DPA members invested $292 million in social programs and managed to conserve three hectares of land for every hectare they used for mining; yet the gender wage gap was 24%, and the DPA’s environmental impact per $1 million of revenue was 49% higher than the all-sector average.
“Transparency is possible and is an important investment,” says DPA chief executive Jean-Marc Lieberherr. “More than ever before, people want to know about the products they are purchasing. They want to know who made them and what impact these have on communities and on our planet. There are still many outdated misconceptions about the diamond industry, and it’s one of our top priorities to ensure that our sector is represented accurately and fairly. [But] another purpose behind transparency today is to document and hold ourselves accountable to the corporate goals we set, and provide a reference point for future progress.”
Despite the major leaps the trade has made, transparency remains a work in progress. Now, at least, that work is being conducted out in the open.
Image: Hitandrun at Début Art
Article from the Rapaport Magazine - October 2019. To subscribe click here.