Demand driven ethics

Avi Krawitz

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.

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.

Source Rapaport