The value of values

Avi Krawitz

The push for a traceable and transparent supply chain is as much about profits as it is about principles.

There’s a lust toward trust,” Leanne Kemp jokes as she explains the movement driving businesses to embrace sustainability. Since 2015, the company she founded and heads, Everledger, has been on a mission to facilitate that trend, using its blockchain-powered platform to help diamond and jewelry businesses keep a transparent record of their products’ provenance.

Everledger is not the only one doing so. Over the past half-decade, several industry initiatives have gained steam, including Tracr by De Beers, Sarine Technologies’ Journey program, and the Diamond Origin Report service from the Gemological Institute of America (GIA). That’s in addition to the growing membership in organizations and trade bodies that set standards for responsible sourcing and sustainability.

The shift is part of a global trend that’s seeing more industries showcase their values and the good they’re doing, Kemp observes.

The mantra has always been to look after shareholders, but over the last decade, there has been a pivot to focus on stakeholder value,” she explains. “That means more than just employees and shareholders that need to be understood and valued. It’s about people and the planet, and how the wider supply chain affects all those.

In the diamond and jewelry pipeline, there’s been a flurry of companies publicizing their environmental, social and corporate governance (ESG) policies recently. De Beers has made sustainability central to its messaging with its Building Forever 2030 program, and the likes of Signet Jewelers, Richemont, Lucara Diamond Corp. and Alrosa all published extensive sustainability reports in the past few months — documents that were not previously part of the trade’s typical investor or public relations strategy.

From ‘Do no harm’ to ‘Do good

The United Nations laid the groundwork for this newfound focus when, in 2012, it formulated its 17 Sustainable Development Goals (SDGs) to provide a framework for companies’ social-responsibility strategies.

For its part, the diamond and jewelry industry has made efforts in recent decades to adopt policies that would keep it on an ethical path, even if it has often faced criticism for its sourcing practices. Its most famous initiative, the Kimberley Process, was devised to stem the flow of conflict diamonds, while the Responsible Jewelry Council (RJC) has enabled more extensive auditing through its Code of Practices and Chain of Custody standards for minerals.

In May, the RJC aligned with the UN by joining the latter’s Global Compact SDG Ambition platform, which aims to accelerate the adoption of sustainability objectives in the business community. The RJC also established a task force to measure the SDGs’ impact on the industry and educate its members on the UN goals. “We began by uniting the industry behind a common set of standards, and now we are uniting the industry again as we up our ambition from ‘Do no harm’ to ‘Do good,’” declared RJC executive director Iris Van der Veken at the time of the announcement.

Financial incentive

The end goal of all these initiatives is to increase consumer confidence, says David Bonaparte, president and CEO of US umbrella organization Jewelers of America (JA), which requires its members to sign a code of conduct in line with industry standards.

But it’s not just consumer demand that’s driving ethical sourcing programs. A major catalyst is actually the financial markets, according to Kemp, as there is real money behind the trend. Asset management giants such as BlackRock and Fidelity have put sustainability practices at the core of their investment programs, she says.

Financing based on green, social and sustainability goals in North America grew by an average of 76% year on year between 2016 and 2020, according to Climate Bonds Initiative, which works to mobilize the bond market toward climate change solutions. Luxury companies such as Prada, Chanel, Burberry and Cartier have all issued bonds with sustainability strings attached.

So it’s beyond a marketing ploy,” Kemp stresses. “Financial instruments are now being underpinned by such information and data, and unless you can get true transparency and visibility across the supply chain, there is a risk for any company.

Priorities: Price and style

While financiers have seamlessly pivoted to prioritizing the ESG component of their funding, consumers appear to be taking longer to change their mind-sets.

Most observers agree that people are not coming into stores in droves asking questions about the origins of diamonds or gold, or the social practices of the jeweler and its suppliers. First and foremost, consumers are looking for the right brand, price and design, says Patrick Bennett, founder of Successful Consultants, which works with jewelry and luxury brands. Responsible sourcing is lower on customers’ list of priorities.

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Source Rapaport