U.S. diamond protocol highlights appetite for new control mechanisms
by eyetee | October 25, 2012 3:51 pm
By Jacquie De Almeida
The Diamond Source Warranty Protocol is a sign there is a desire for additional guarantees that stones from dubious sources remain out of the supply chain.
Ian Smillie, one of the architects of the Kimberley Process (KP), says the protocol has sparked quite a debate, although he believes it was only a matter of time before something was developed that worked to maintain confidence in sourcing, which the certification scheme continues to wrestle with.
“The newly announced Diamond Source Warranty Protocol has gone off like a handful of bullets in a campfire, with some parts of the industry crying foul, some saying it can’t or shouldn’t be done, and others claiming duplication and confusion with other initiatives,” says Smillie, chair of the Development Diamond Initiative (DDI).
“This effort and others like it are clear indications that important parts of the industry are looking for warranties that extend beyond the Kimberley Process. With more and more consumers asking questions about diamonds—just as they do about coffee, bananas, and fur coats—it’s not surprising key industry players are looking to other mechanisms for the assurance that Kimberley is still struggling to provide.”
Developed by Jewelers of America (JA), Diamond Manufacturers and Importers Association of America (DMIA), Jewelers Vigilance Committee (JVC), and other leading U.S. jewellery associations and companies, the protocol is a voluntary approach to inventory management for retailers to exclude diamonds from questionable sources as determined by them.
‘Subject sources’ can be a country or a person, even if they export or import under the KP. Factors affecting what can be considered a subject source include: protection of consumer confidence; concern over negative media attention; human rights abuses; and government action (i.e. national or international sanctions).
The groups are billing the protocol—which is designed to work alongside the KP—as a tool to bring greater transparency and accountability to the supply chain, and as a response to increased pressure from consumers, human rights groups, and governments to provide assurances of ethical sourcing of both rough and polished diamonds.
In the days that followed its release, the protocol faced some strong criticism, with many pointing to additional costs and undue burden on an industry that is already battered down by low demand and small margins.
Shortly after news of the protocol hit the headlines, the World Federation of Diamond Bourses (WFDB) and the International Diamond Manufacturers Association (IDMA) expressed its members’ “grave concerns” over how it would affect the flow of goods through the pipeline. In a press release, the groups said they would be consulting with their U.S. colleagues “to mitigate the perceived difficulties and barriers this initiative would be presenting to the international gem and jewellery business community.”
Implementing the protocol will not happen overnight, says Robert B. Headley, JA’s vice-president and chief operating officer (COO). Â He also points out it does not specify procedures between buyer and supplier to exclude diamonds from questionable sources.
“We refer to the protocol as a template because individual retailers will adjust it to meet their own needs with their own suppliers,” said Headley in an exclusive interview with Jewellery Business.
Mel Moss, president of Regal Imports in Vancouver, says tracking every stone to its source is a lot of work, particularly for big manufacturers, making the protocol cost-prohibitive. He also questions whether there is consumer demand for this type of assurance.
“Does the consumer want to know whether the stone was mined in Australia, Botswana, Russia, or some other place, or do they want to know they’re buying an ethical product?” asks Moss.”How much information is worthwhile, and is the consumer asking for this? I don’t think many retailers are getting that type of demand. Consumers want to know it’s ethical and mined in a proper manner and that the diamond is conflict-free€¦ [The protocol] is going overboard, and we’re making our luxury product non-competitive.”
Instead, he believes putting more effort into revamping the KP is a better use of resources.
Headley says there’s no telling what, if any, additional costs will be incurred to implement the protocol. All that depends on what sources the retailer wants to exclude and the seller’s inventory management processes.
“I presume there might be depending on the individual situation and what they actually have to do,” he says. “In our consultations with suppliers and manufacturers, numbers of them said they were doing this anyway.”
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