Ethical concerns grow over Kimberley Process diamond charter

Minerals

2018-03-22 / www.ft.com




The mining process insufficiently protects human rights, campaigners say

 

There might seem to be a great distance between the diamond mines of Africa and the English county of Hertfordshire, but the connection between the two is on Harriet Kelsall’s mind. Customers are starting to ask Ms Kelsall, the owner of Bespoke Jewellery, to reassure them about the provenance of their gems.

In early February, Ms Kelsall and four other jewellers agreed to consider sourcing the stones she puts into her clients’ pieces from a handful of identified mines in developing countries. That way she could tell her customers exactly where their diamonds came from.

“What is it going to take for us to find a diamond that is traceable that’s not from the developed world?” asks Ms Kelsall, who sells from Hertfordshire, Cambridge and Primrose Hill in London. “There’s no mechanisms and nobody seems to be looking at this. The big companies need to lead the way on this but I don’t think they really are.”

Ms Kelsall’s complaint gets to the heart of a matter afflicting the diamond industry. Governments, industry and civil society groups established the Kimberley Process in 2003 to address concerns that diamonds were being used to fund a series of brutal civil wars that erupted in Africa in the 1990s. However, jewellers and non-governmental organisations are becoming worried that even Kimberley Process-certified jewellery might still be linked to human rights abuses, corruption and the perpetuation of poverty. The credibility of the process is eroding.

 Harriet Kelsall Founder and Chairman of Harriet Kelsall Bespoke Jewellery says her customers want diamonds to be ethically mined © Anna Gordon/FT

Dissatisfaction broke out into the open when the Canadian non-governmental organisation Impact, which monitors the management of natural resources in Africa, pulled out of the Kimberley Process in December 2017. Impact, a founding member, said the process provided a false assurance to consumers and did not ensure a “clean, conflict-free and legal diamond supply chain”. “Consumers have been given a false confidence about where their diamonds come from,” said Joanne Lebert, Impact’s executive director.

The Kimberley Process requires its 81 member countries to control the import and export of diamonds and include a certificate with shipments to certify the country of origin. But it defines a “conflict diamond” only as a gem that is used to fund rebel groups. That means it does not cover broader human rights abuses, cases of state violence against diamond miners or poor working conditions.

As a result, the KP has endorsed exports of diamonds from Angola and Zimbabwe “despite their being mined under highly abusive conditions”, according to New York-based Human Rights Watch.

“It’s a guarantee the diamonds are only free of a very narrow set of abuses,” says Michael Gibb, a campaign leader for conflict resources at NGO Global Witness, which left the KP in 2011. “If consumers think a Kimberley Process certificate means they are free of conflict financing or human rights abuses, they would be wrong.”

Even when situations fit the narrow definition perfectly, the KP has struggled to manage the flow in conflict diamonds, Mr Gibb says. In May 2013, the Kimberley Process banned diamond exports from the Central African Republic, following the outbreak of conflict in the country. That ban was partially lifted in 2016, even though an estimated 140,000 carats of diamonds had been smuggled out of the country in the first year of the ban, Mr Gibb says.

Stephane Fischler, the president of the World Diamond Council, was involved in the creation of the Kimberley Process and says the diamond industry is “fully behind” a broadening of the definition of a conflict diamond. He says reform was first proposed in 2012 and last December, at a meeting in Brisbane, the organisation created an ad hoc committee on review and reform.

Still, Mr Fischler acknowledges that it could be a slow process, since any decision requires consensus from all 81 countries. “We’re not naive, it’s not going to be easy,” he says. “But we want to see meaningful results — not just meetings after meetings.”

The Kimberley Process only covers rough diamonds — that is, as taken out of the ground — from their country of origin. But once they leave the mine, diamonds can change hands many times, in global trading centres such as Dubai and Antwerp, or in India where most of the world’s diamonds are cut and polished.

The process does not cover child labour either. While more than 80 per cent of the world’s diamonds come from large mines, the remainder are still mined by hand, often by children. An estimated 1m children work in artisanal and small-scale mining, HRW says.

 

Some of the largest diamond companies are already starting to take action to trace this global supply chain. De Beers, which sold $5.3bn of diamonds last year, is working on using blockchain, the technology behind digital currency bitcoin, to improve the traceability of diamonds. Blockchain will enable “a single, tamper-proof and permanent digital record for every diamond registered on the platform”, says De Beers.

“It’s another way of being able to say that goods on the blockchain are what they say on the tin,” says Bruce Cleaver, the chief executive of De Beers, “because consumers have a right to know their diamonds are responsibly and ethically sourced , and are natural and free of conflict.”

Diamond companies have two pressing legal motives. NGOs have found it easier to hold companies to account thanks to tighter regulations on conflict minerals after the passing of the Dodd-Frank Act in the US and restrictions on child labour in the UK with the Modern Slavery Act in 2015.

In addition, a generation of younger consumers want to know where their diamonds come from. “Consumer weight is definitely growing,” says Estelle Levin-Nally, the founder of Levin Sources, which helps companies with their mineral sourcing. “More and more companies are saying, ‘We are proactively seeking to do good.’ . . . It’s much more impact-centred.”

A 2016 survey by De Beers showed that 36 per cent of single millennials in the US said the feature of diamond engagement rings they were “least likely to compromise on” was responsible sourcing, compared with 27 per cent of older singles.

But NGOs say they worry that greater demand for traceability could lead to consumers only wanting to buy diamonds from developed countries such as Canada, which has marketed itself as a source of conflict-free diamonds.

“Diamonds supply hundreds of thousands of livelihoods across Africa,” says Mr Gibb. “It would be unfortunate if the diamond industry responds by abandoning those workers and those industries. We have to trade more responsibly — rather than just looking at technological ways to cut them out of the supply chain after profiting from them for so long.”

Ms Kelsall believes the diamond industry needs to adopt a similar scheme to Fairtrade Gold, created in 2011 to support artisanal mining in developing countries. It costs the same as a takeaway meal for two to use Fairtrade gold in an engagement ring compared to standard gold, she says.

“They audit the whole system right through from retailer to the mine so it’s absolutely watertight, unlike the Kimberley Process,” Ms Kelsall says. On only buying traceable stones, she says: “We decided we will do it. If it takes us five years or more — that’s what we want to achieve.”

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