Consumer confidence
December 23, 2007
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| Nancy Orem Lyman is the director of U.S. Consumer Confidence for the Diamond Promotion Service. E-mail her at nancy.oremlyman@jwt.com. |
By Nancy Orem Lyman
This past year has seen unprecedented scrutiny of the diamond industry. Governments, the media, non-governmental organizations (NGOs) and the industry itself pointed out both needed changes and existing safeguards.
On many levels, these efforts—by organizations such as the World Diamond Council (WDC), the World Jewellery Confederation (CIBJO) and the Council for Responsible Jewellery Practices (CRJP), and initiatives such as the Kimberley Process (KP) and the Madison Dialogue—have strengthened and brought greater transparency to the diamond industry.
The WDC served as the industry’s ambassador to field questions on conflict diamonds from the media, NGOs and governments. The KP, the regulatory arm for governments and our industry that oversees the legitimate diamond trade, was lauded as a model of corporate social responsibility at the recent G-8 Conference.
In the past two years, CRJP has emerged with a strong—and growing—membership that is committed to promoting responsible business practices from mine to retail. Even as I write this article, the need for continued improvements to the KP is being discussed at the annual KP Plenary session in Brussels, Belgium, and global jewelry industry advocate CIBJO just held a seminar in Hong Kong on the importance of reputation.
Leading the charge on addressing the challenging social, human rights and environmental issues inherent in the small-scale mining sector (including artisanal diamond mining) is the Madison Dialogue, a cross-sector initiative that promotes communication and collaboration among companies and civil society working to make a difference in these workers’ lives.
The strength of the diamond industry can also be seen directly in producer countries. On a recent trip to South Africa and Botswana, I witnessed the enormous impact diamond mining has on local communities, including “beneficiation” efforts and all that this South African buzzword implies. The cutting and polishing factories now employing hundreds of Africans will soon employ thousands. Thriving communities have been built around the diamond mines, offering access to schools, hospitals and more.
West Africa is improving too. Liberia has recently been accepted into the KP and should soon see the effects of the legitimate diamond trade in local communities. Sierra Leone is now an emerging democracy that has just achieved its first free and open election since the bitter war years. With the new government in place, it is hoped that true beneficiation will soon follow. Both in West and Southern Africa, it is abundantly clear how important—and effective—the KP is in ensuring the legal diamond trade stays that way. This regulation enables governments to collect tax on their own resources, with those revenues returned to local communities, perpetuating the beneficiation process.
The KP and the System of Warranties are of central importance to our industry. Yet the biggest challenge we face may not be another movie, or documentary or miniseries (though each is in production). The biggest threat to our industry is actually our own complacency.
Some jewelers recognize that complacency is a huge mistake. They are continuing to observe strict compliance with industry safeguards and are communicating their high ethical standards to consumers. Yet many others have not yet embraced this understanding.
Recent research has shown that some jewelers believe the “crisis of confidence” is over and nothing more needs to be done. Indeed, this year at JCK Las Vegas, some retailers claimed that the System of Warranty Assurance Statement no longer needs to be on invoices since it is “just voluntary.”
This complacency could breed consumer mistrust and affect your business. It could then hurt producing countries, which rely on legitimate trade in diamonds. Weak business practices by any jeweler will contaminate everyone. Diamond jewelry competes in an environment of increasingly alluring luxury products. Today’s consumer is sophisticated, informed and demanding, particularly on issues that impact our reputation. According to the 2006 Cone Millennial Study, younger diamond purchasers are even more ethically minded than their elders, seeking out companies with trusted business practices.
Research also shows that the public is far more aware of conflict diamonds than ever before. At the same time, almost 40 percent of independent jewelers acknowledged that they are still not fully informed about the KP and the System of Warranties. A whopping 43 percent of consumers report that they mistrust our industry. The integrity of the diamond industry is only as strong as each individual jeweler’s commitment to responsible business practices.
So what can you do to meet the challenge of complacency? In addition to visiting the WDC’s Web site, found at Diamondfacts.org, here are five important steps:
1. Know and trust your supply chain and insist that all invoices include a system of warranty guarantee.
2. Keep your diamond-sourcing policies current and available for any customers who ask.
3. Understand the issues that matter to your customers.
4. Be clear and explicit about what you are selling.
5. Train your staff.
Together and united in a commitment to responsible business practices, our industry will continue to thrive in the decades to come. And for the upcoming holiday weeks, we can feel proud to be selling a product so beautiful, so unique and so rare that it is the only way to truly represent the deepest of human emotions: diamonds.