Politically Correct Diamonds?

Despite all the noise about conflict diamonds, the industry has taken comfort in the fact that most consumers do not seem to be aware of—or care about—the issue.

But a simple Internet search on “conflict diamonds” finds many people who do know about the topic and who are often angry about it. “I really loathe diamonds,” writes one blogger. “I could not in good conscience purchase a diamond firsthand, because I may as well be the one shooting villagers,” writes another. Even the Wikipedia entry on the upcoming movie Blood Diamond includes (at press time) a shot at De Beers: “De Beers is most deserving of the term ‘making a killing’ off of the diamond market.” That’s startling for a controversy the industry thought was settled three years ago.

Whether it’s because of Kanye West’s “Diamonds From Sierra Leone” song, movies that mentioned the topic (including Dogs of War and Die Another Day), or simply because seven years of publicity has finally sunk in, consumer awareness of conflict diamonds seems to be at an all-time high. Some worry that the release of Blood Diamond this winter will only make the situation worse.

To meet these concerns, a whole new product category has opened up. Call them PC diamonds—diamonds specifically meant to assure consumers they are conflict free.

The trend has already been the subject of stories in Women’s Wear Daily and on ABC News. Some of these products simply take advantage of current systems—like the Kimberley Process—to assure consumers that their diamonds are conflict free. Others—like Martin Rapaport’s still-on-the-drawing-board plan for Free Trade diamonds (see “Whatever Became of Sierra Leone?,” p. 100)—are more ambitious and could involve changes in the diamond pipeline and conditions in Africa.

O, CANADA

If you do want to sell a PC diamond, perhaps the easiest way is to sell a Canadian stone. Since the conflict diamond issue exploded, Canadian diamonds have been invoked as “conflict free” by organizations including TheNew York Times and ABC News. In fact, when the issue started, there were whispers that it was a Canadian plot, since many of the original movers on the issue were Canadian.

Yet, over the years, members of Canada’s diamond industry (with a few exceptions) have been reluctant to use the issue as a selling tool. But now that’s changing—at least in some quarters.

Oren Sofer, president of Canadia, a New York–based Canadian brand, admits his company has considered consumer ads calling his stones “conflict free.” It hasn’t done that so far, although his trade communications do describe the stones that way.

He says it’s a tricky question. “We don’t want to make an issue where there is none,” he says. “You don’t sell a negative. If you make yourself about a temporal issue, you yourself become temporal.”

But he adds: “With the movie, all of a sudden jewelers from all over the country are calling. It’s a much bigger deal than anything has been up to this point. … If I am sitting with a customer telling them about the Kimberley Process, it’s a lot to get across. Instead of giving them a whole big answer, they can just say we have an answer for you.”

Others are far less shy about making a connection. San Francisco company Brilliant Earth, which has bought the ad space for “conflict diamonds” on the Internet search engine Google, calls itself a “socially responsible alternative” to regular diamonds. “It’s a for-profit company that also has a social mission,” says co-president Beth Gerstein.

All of Brilliant Earth’s diamonds are Canadian, since Canada, Gerstein says, is the only producer that can guarantee its country of origin. In addition, she notes, “The Kimberley Process doesn’t address child labor, state-sanctioned violence, or local brutality.” True enough, but a press release takes further shots at Kimberley, which it says is “poorly designed to prevent conflict diamonds from entering the mainstream market. The Kimberley Process has no independent monitoring mechanism, instead relying on nations to monitor themselves.” The point is debatable; Kimberley monitoring teams, including a nongovernmental organization representative, do examine internal systems to ensure compliance, which is how two countries got banned from the Process.

Five percent of Brilliant Earth’s profits go to the Diamonds for Africa Fund, which advises consumers to donate their diamonds to “African communities ravished by the diamond trade.” Gerstein and Brilliant Earth’s other co-founder are both on the Diamonds for Africa advisory board, and DFA materials refer to Gerstein as both a “director” and a “founder.” But she told JCK: “There is no direct affiliation [between Diamonds for Africa and Brilliant Earth] other than the fact that we donate [and] are helping to get it off the ground.” She notes that funk legend George Clinton is scheduled to play a DFA benefit in October.

So how valid is all this? Canada’s Ekati and Diavik mines are certainly conflict free. (Though Ekati had a bit of trouble when its workers went on strike earlier this year, and their union ran newspaper ads calling its diamonds “dirty.” That strike has since been settled.) Both mines were approved only after assurances that a certain number of jobs would benefit the local community and after extensive environmental impact studies. “They have to move every caribou over there to make sure that they aren’t disturbed,” notes Sofer.

But unlike diamond producers such as Botswana and Sierra Leone, Canada is not a third-world country. And some argue that consumers who buy Canadian stones with the intention of helping Africa may end up hurting it.

“Brilliant Earth may be well intentioned, but the logic is backward, and it doesn’t do anything much to help Africa,” says Ian Smillie of Partnership Africa Canada, an NGO active on the conflict diamond issue. “At least 60 percent of the world’s gem diamonds come from Africa. [So] Canada gets the business and Africa gets more charity. Or to put it another way: Canada gets the diamond mine and Africa gets the shaft.”

PASSPORTS AND OTHER NOTIFICATIONS

If the standard guarantees about conflict diamonds aren’t enough, some say, let a third party guarantee it for you.

That’s the thinking behind the new Source Veritas passports from the Gem Certification and Assurance Laboratory. Originally meant for Diamond Trading Company sightholders—but since expanded to buyers from Canadian mines—GCAL certificates “Gemprint” polished stones that are warranted by their manufacturers to be conflict free. (See sidebar at right.)

Yet the Source Veritas system includes no additional controls of rough, the real focus of the Kimberley Process. Instead, GCAL takes the manufacturer’s word that the stones are from nonconflict areas and tracks them from there. That isn’t much different from what Kimberley does, and hardly makes it a mine-to-market guarantee. When GCAL pitched the idea to the International Diamond Manufacturers Association in Tel Aviv, Israel, recently, the reaction was skeptical; “We told them: Your checks and balances should go a lot further than the assurances of the submitters,” says IDMA president Jeffrey Fischer. However, GCAL president Don Palmieri argues: “It is very unlikely that a sightholder, who is sworn to uphold [De Beers’] Best Practice Principles, will compromise this process.”

Meanwhile, De Beers’ retail chain, De Beers LV, is getting in the game with “passports” that guarantee a stone is “ethically sourced … natural, conflict free and child labor free, enhancement and treatment free.”

Ironically, there’s no real reason for most of these products, at least in theory. Any jeweler who requires suppliers to stamp invoices with Kimberley Process warranties—something JCK has found many jewelers still not doing—can assure their customers their diamonds are conflict free. The World Diamond Council’s newly released “confidence pack” instructs jewelers on how to do this. (See sidebar, p. 113.)

But, as consumers become increasingly skeptical, some worry that extra assurance is necessary. “This is a service for the industry,” says GCAL CEO Michael Haynes. “It’s a marketing and disclosure tool. If we can make the consumers more confident, everyone will win.”