Although various proposals are in the works, much less progress has been made in making diamonds traceable. When the RJC became serious about implementing a system for tracing diamonds in 2011, just like it is starting to do for gold and platinum, the diamond industry struck it down. Meanwhile, despite some pilot projects, fair trade diamonds have yet to become a reality.
To some extent, the jewelry industry’s apparent progress on tracing gold and platinum – and its foot dragging on diamonds – is counterintuitive. Diamonds occupy a special place in our romantic imaginations. They are laden with emotional significance. If the jewelry industry were to make any part of engagement rings traceable, you would think it would be diamonds.
Furthermore, in 2003, public outcry over blood diamonds led to the establishment of an international diamond certification scheme known as the Kimberley Process. The Kimberley Process, which brings together governments, NGOs, and the diamond industry all in one forum, has been in operation for 10 years. By now, it would be reasonable to expect that the Kimberley Process would have made diamond traceability a requirement. It hasn’t, however. As this excellent article describes, diamonds from all over the world still get mixed together once they reach cutting and polishing centers such as Surat, India. Their origins are completely unknown by the time they reach jewelers’ showcases.
So what explains the slowness of the diamond industry in creating a transparent supply chain? One possibility is that, as a result of the Kimberley Process, the diamond industry has become complacent. The Kimberley Process, although deeply flawed, seems to have provided the diamond industry with the political cover it needs to resist reforms.
But the more interesting question may be: why has the jewelry industry taken steps to make gold and platinum more traceable? The answer almost certainly lies in a provision inserted into the Dodd Frank financial law of 2010. The provision requires certain publicly-traded companies to issue periodic reports to the Securities and Exchange Commission stating whether their products may contain “conflict minerals” – tin, tantalum, tungsten, as well as gold – that may be contributing to the war in the Democratic Republic of Congo.
This disclosure requirement has sent the jewelry industry into a scramble. The ripple effects have been extraordinary. Although the law was intended only to reduce funding for the Congolese civil war, the jewelry industry has responded by creating a system for tracing all gold and platinum back to its source. The impact of Dodd Frank on the gold and platinum supply chains now has some observers wondering whether Congress should pass a similar law for diamonds. We think this option is worth considering. Regardless, the fact that gold and platinum are becoming more traceable gives us optimism that the diamond industry will eventually agree to a traceability mechanism too.
What are the takeaway lessons from all this? One is that despite some protests to the contrary, creating transparent supply chains is feasible if industry has the will to do it – and particularly if the law requires it.
But a more basic point is that the jewelry supply chain is undergoing some very promising changes. This Valentine’s Day, finding an engagement ring with traceable components may have been difficult. We hope that on some future Valentine’s Day, every newly-engaged couple will be able to celebrate with an engagement ring that is transparently beautiful.