Given all the talk about tracking diamonds—and the now-delayed Responsible Jewellery Council “chain of custody” for diamonds—I spoke with the people at Forevermark today about how their system works.
The brand’s CEO Stephen Lussier told me that the Forevermark “chain of custody” has four elements that comprise it:
– First, the Forevermark only covers a limited amount of diamonds (bigger stones, 14 points and up), from a limited amount of mines (the DTC mines, Alrosa’s, and the mines from BHP and Rio Tinto, with the exception of Murowa in Zimbabwe).
– In addition, while it isn’t necessary to be a DTC sightholder to be a Forevermark diamantaire, they all currently are, which means they buy DTC goods directly from the mine. So in that sense, they are dealing with a very short supply chain.
– All Forevermark diamonds are inscribed with a serial number, which helps with the tracking process. In fact, this is one reason that small goods are excluded; they can’t get the numbers on the table.
– Finally, the assurance about “chain of custody” is just one aspect of the Forevermark “brand promise,” so any costs of the system are absorbed in the brand premium (which varies, but I generally hear it quoted as everywhere from 5 to 10 percent).
How much are those costs? Lussier says they amount to maybe one or two percent extra, as most companies try to have the Forevermark “track and trace” apparatus piggyback on systems already in place to prevent theft. And once the process is set up, the costs generally diminish over time. He says the inscription is generally considered the biggest expense.
One Forevermark diamantaire I spoke with said maintaining the segregation of goods was “a pain,” and requires a full-time employee. “I haven’t broken it down but it definitely costs a bit,” he says.
The system is audited regularly by SGS, a supply chain specialist that also audits De Beers’ Best Practice Principles.
Yet, even with all this, Lussier seems rather skeptical about the prospect of a certified industry-wide supply chain of custody, noting that “companies that are into high volume melee production don’t have the ability to track those stones.”
He adds that developing the Forevermark system involved a “lot of trial and error” and many years.
“We are clearly supportive of these kinds of initiatives,” he says. “We do need to find ways as an industry to provide the assurance that is required. But this isn’t going to be accomplished overnight.”
A few thoughts, and then I hope to leave this topic for a while:
– For a long time in this business, there was a reluctance to talk about having a certified supply chain, because of the fear that it would favor big conglomerates (like De Beers) and cut out artisanal miners, the poorest, most vulnerable parts of the chain. Indeed, there was quite a bit of criticism of sellers of Canadian diamonds for just that reason.
Now, we have the Forevermark, which for now shuts out the informal sector—although to be fair, it really would be hard to imagine it including artisanal diamonds, and not ending up on the wrong side of a TV exposé. The only informally-mined diamonds that might work as “ethical stones” are those vouched for by the Diamond Development Initiative or under the rubric of “Fair Trade” or some other brand. And those insignias don’t exist (yet). Still, the RJC’s agreements with the DDI and ARM are meant to bring those miners into its system.
– Speaking of which, the RJC chain of custody for diamonds may need more work—for instance, there may need to be a size cut-off. It’s probably good that everyone involved has gone back to the drawing board. Still, the group shouldn’t give up—and I don’t think they plan to. Certifying that companies don’t use child labor or waste energy is fine, but if the RJC really wants to have an impact, it needs to tackle this issue.
– Let’s not forget we are not the only industry subject to this kind of scrutiny. If you don’t believe me, go to change.org, and you’ll see all sorts of petitions about chocolate, tomatoes, cell phones … any product you can imagine. Indeed, the electronics industry is also being pressured to develop traceable chains for its metals, in the wake of all the talk about “conflict minerals.” No less than the sainted Steve Jobs has said that would be difficult. But they are working on it, and if I had to bet, they will probably accomplish it quicker than this industry. Indeed, one person experienced in these matters just told me: “Businesses always say these systems can’t be done. And then 10 months later, they come back and say we’ve figured it out.”
– Finally, does all this matter to consumers? Is chain of custody really a selling point? I spoke to Jeff Corey, of Day’s Jewelers in Maine, who carries the Forevermark and said that, surprisingly, it is:
We give the consumer an option: You can get a generic diamond at this price or pay a little bit more and get a Forevermark diamond. In a lot of cases, the customer says: I am willing to pay that premium.
Most men in the 25-to-34-year-old range think: I love this girl, I made a decision to marry her, but why do I have to buy a diamond? They feel they are overpriced, they don’t understand them. The whole responsibly sourced presentation makes it a lot more meaningful. It kind of takes the edge off. They think, if I buy this thing, I am putting people to work in the most poverty-stricken continent on Earth. That’s a powerful story.
And, of course, chain of custody could also be used as something of a defensive measure. If anything, this past week has been something of an advertisement for the need for greater supply chain controls, with everyone from a prime time newsmagazine to a million different articles on the Kimberley Process reiterating the same theme: Most jewelers don’t know where their materials come from. But they need to.
We are getting a very clear message. It would be a shame if we didn’t hear it.