Some years ago, I attended an important industry event where the issue of transparency was banded around endlessly. Following the discussion, a leading diamond industry figure walked into the elevator with several of his employees as I waited to ascend.
"You know the trouble with transparency," his voice boomed out. "You can see right through it." That's a good line, I thought. I must remember it.
That little memory has returned to me several times lately as I have thought about the issue of transparency in the diamond industry.
How seriously is it really taken at every level, but particularly in that last meter at the retail level where a diamond jewelry item moves from the shopowner’s hands to those of the buyer?
How much do the two sides really care about transparency and traceability? Do buyers ask? And if they don't enquire, do retailers go out of their way to tell them?
Do consumers know and – more importantly – are they being told about the true value of a lab-grown diamond (LGD)? Do they understand that when they come back to upgrade to a natural diamond several years in the future their LGD will have little value? Upgrading will essentially cost the same as buying a new diamond.
Origin, provenance and supply chains
Although some consumers may care, and ask about, the source of their jewelry, they are unlikely to fully understand the nature of jewelry supply chains. For that matter, many wholesalers and retail members are not always fully aware either and, therefore, unable to answer questions even when consumers know what to ask.
Over the past decade, consumers have been flooded with buzzwords such as sustainability and ethically created. Needless to say, on many occasions these are deceptively used, to put it mildly. The aim is clearly to cause retail buyers to feel that they are acquiring goods that have at some stage been vetted and their origin “approved”.
As with many other industries, the jewelry industry has also been subjected to “greenwashing” - where unscrupulous members of the trade have, frankly, deceived consumers.
In the opinion of many, the LGD industry is seen as a good example of this. It has been successful in persuading consumers that LGDs are “eco-friendly” and “ethical.”
Many buyers do not know that these diamonds are mostly grown in India and China. Why is this important? Because the main source of power in those countries comes from the burning of coal. Producing LGDs demands large volumes of electricity – and producing that power sends huge amounts of harmful materials into the atmosphere. You won't find that on any fancy marketing leaflets.
It should be stated that some LGD manufacturers are working to create less of an impact on the environment, but it would appear that this is a relatively small proportion.
It is true that the natural diamond industry also has an impact on the areas where diamonds are mined. However, the companies involved have invested increasingly large sums in dealing with those impacts and returning the areas affected back to their almost natural state – both while operations continue and when the mine has become depleted. An example of this is the work that De Beers has been doing in this respect for much more than a decade.
In addition, the natural diamond industry helps communities in the countries in which it operates by creating income and building infrastructure, such as schools, clinics and hospitals. In Botswana, the government has used some of the income from its rough diamond sales to build roads as well.
Transparency builds trust
The diamond industry needs to understand that it is not simply a question of talking to consumers. It is about creating brands that value and build trust. The industry needs to ensure buyers that it believes in values related to transparency, openness and sustainability.
As stated above, for example, diamond mining companies that are proactive in reducing environmental damage and creating a livelihood for a large number of people can show how they are creating and promoting a positive and meaningful impact in return for extracting natural resources.
People like to hear about people and telling honest stories about a company’s operations and thereby providing origin stories help promote a brand’s integrity. Where companies have a good story to tell, they are able to create content and conversations that are honest and with which consumers can relate.
The American jewelry market will benefit from the publication by the Federal Trade Commission of its Green Guides later this year. The guidelines aim to help marketers understand and keep in line with what advertising and marketing claims can honestly be described as green, eco-friendly or sustainable.
DMCC issues special report on Provenance, Traceability and Technology
A new report from the Dubai Multi Commodities Centre (DMCC) emphasizes the need for globally agreed-upon standards for traceability and transparency in the diamond industry.
The report highlights the importance of high-tech solutions to ensure the integrity and sustainability of the diamond supply chain, while acknowledging concerns about potential delays, increased costs, and regulatory overreach, particularly in light of recent G7 sanctions against Russia.
To address these challenges, the report calls for the formation of a working group to establish minimum viable standards for traceability and transparency.
Titled The Future of Trade, the DMCC report outlines six key recommendations for the diamond industry: setting its own standards, developing an interactive ledger, adopting a technology-agnostic approach, creating compatibility and trust layers, improving payment efficiency, and fostering continuous collaboration.
Ahmed Bin Sulayem, executive chairman and CEO of DMCC, stressed the need for the industry to collectively embrace technology in order to advance. “By utilizing AI, blockchain, and laser micro-machining, the diamond industry must seize opportunities to enhance transparency," he said.
The report’s findings will be discussed at the sixth edition of the Dubai Diamond Conference on November 11.
Create solid core values
The industry has seen many cases over the years where jewelry brands have raced to create a message for every trending consumer preference. Instead of doing this, companies might do better by identifying and promoting what they are all about. Promoting transparency about the diamonds’ source and what they are doing, such as giving back to the community, are just two examples of this.
Educating consumers and making them aware of where diamonds come from and the good that they do will benefit brands. People love stories – so make sure they are real.
Philip Carter for Rough&Polished from London
