As the world’s largest diamond producer, De Beers is working to raise ethical standards for the entire industry through its Best Practices Principles Assurance programme
The need to reduce the environmental and social impact of gold and mineral mining is changing the way many luxury goods companies do business. Almost all diamonds sold in western countries are certified conflict-free through the 15-year-old Kimberley Process, while the Dodd-Frank Act in the US requires companies to ensure conflict minerals are not in their supply chains.
However "conflict-free" only applies to diamonds that are not being used to finance rebel movements against recognised governments. Campaigners say large numbers of diamonds sold in western shops are tainted by violence, human rights abuses, poverty, and environmental degradation. In Africa, where most diamonds are mined, 1 million diamond diggers earn less than a dollar a day.
With 1750 tons of earth extracted to find a 1.0ct rough diamond, even Canadian diamond mines, which are well-regulated, are often built in environmentally fragile ecosystems, according to The Greener Diamond foundation.
Ensuring that its diamond supply chain is built on strong ethical foundations is crucial to De Beers, the world’s largest producer of producer of diamonds, with 32% of the market by value in 2015. De Beers is also a diamond jewellery retailer, through a 50/50 joint venture with Moët Hennessy Louis Vuitton.
“Diamonds symbolise precious moments in people’s lives – and our collective actions must live up to the values and emotions ascribed to them,” the company says in its 2015 Report to Society CSR report.
In 2008, the retail arm of the company created Forevermark, an assurance scheme that promises De Beers consumers that their diamonds are beautiful, rare and responsibly sourced. The scheme provides full traceability of a diamond's path through the supply chain, but all De Beers diamonds have to comply with its Best Practices Principles (BPP) Assurance Programme, which it introduced in 2005 to create ethical and sustainable benchmarks not just for diamond mining, but also the cutting, polishing and manufacturing processes.
Purvi Shah, De Beers’ pipeline integrity manager, says while the 2003 Kimberley Process Certification Scheme and the World Diamond Council System of Warranties focus on blood diamonds, De Beers saw the need for regulations that could touch on everything from mining to political donations.
“De Beers recognised that there was no stand-alone external standard that addressed all these issues,” she says.
In 2011 De Beers aligned the BPPs with Responsible Jewellery Council (RJC) standards, which cover platinum and gold as well as diamonds. In 2014 it added sections covering sourcing from artisanal and small-scale mining and human trafficking.
Shah explains that the impact of the BPP scheme is amplified beyond De Beers’ direct mining operations. They also apply to the 90 “sightholders” and accredited buyers of its diamonds and their major subcontractors. About 320,000 employees in the diamond industry from 72 countries benefit from the principles, although only 20,000 of them are De Beers’ direct employees and contractors. “We are able to leverage our position [in the industry] to improve standards through the BPP.”
Audits are conducted by a third-party verifier and companies are given the opportunity to address shortcomings. About one-third of audits involve desktop reviews and about 10% take place onsite. “Clients are expected to enact corrective actions where infringements are identified and we use an online platform for the verifiers to track this progress and to address any infringements, such as a lack of health and safety policies and procedures,” Shah adds.
The BPPs are designed to be flexible, allowing them reflect legislative changes such as anti-corruption laws and emerging industry risks.
Shah says when the UK passed its Modern Slavery Act legislation, for example, she reviewed the section on forced labour and human trafficking in the BPPs, and found that it was robust enough to cover the new reporting obligations for managing supply chain risks downstream.
“We’ve seen that people have strong management practices in place [as a result of the BPPs]. It’s about trying to identify the new risks and seeing that they are effectively addressed.”
Shah said De Beers is working on collecting better data in order to measure and benchmark the impact of the BPP programme. She points out that purchasing a diamond, unlike a lot of consumer spending, is discretionary.
“It’s important to protect consumer confidence in diamonds and for the industry to be sustainable. It’s a symbol of love and the product itself should be untarnished.”
Labour rights campaigners, however, believe De Beers could do more. Sharan Burrow, general secretary of the ITUC said: “De Beers has navigated the global scandal of conflict diamonds over several decades. They profess to now monitor their operations, but in practice they ask up to 90% of their suppliers to do a self-assessment and only do “independent” assessments in the rest. So if only a third of the self-assessment forms completed by their suppliers are reviewed it would seem that they need to do better.”
She added that despite the extraordinary profits made in the diamond industry “low wages, insecure and often dangerous working conditions prevail for workers in their developing economy operations and supply chains.”
This article is part of our luxury goods briefing. See also:diamonds supply chains Conflict minerals De Beers