Last updated: Jul 2008
Public awareness around the origins of jewellery began in the late 1990s when a few NGOs started to talk about blood or confict linked to some diamonds. A number of organisations, particularly Global Witness (UK), Partnership Africa Canada (Canada) and Fatal Transactions (Holland), highlighted how revenue from diamonds was fuelling wars in African countries like Sierra Leone, Liberia, Democratic Republic of Congo, Angola and more recently the Ivory Coast.
The 1998 Global Witness report entitled ‘A Rough Trade: the Role of Diamond Companies and Governments in the Angolan Confict’ was the frst of many exposés that demonstrated the links between corporations and governments doing business (buying diamonds and selling arms) with despotic governments and warlords.
These early NGO campaigns and reports preceded a mainstreaming of the issues through popular media, such as the 2006 Hollywood flm Blood Diamonds, or the lyrical juxtapositions of affuence and bare existence posed in “Diamonds from Sierra Leone” by musician Kanye West. As well as affecting consumer consciousness, this campaign activity has also created industry awareness of a threat to its image, provoking the beginnings of reform within the multi-billion dollar sector.1
Companies were relatively quick to realize this trend, and its potential to affect their bottom line. Ethical jewellery currently accounts for less than 1% of the $56bn annual jewellery market.2
Nevertheless, large multinationals, in expectation of future growth, have responded by engaging with numerous processes such as the Extractive Industry Transparency Initiative or Global Reporting Initiative, and more recently the Initiative for Responsible Mining Assurance (IRMA) (see links).IRMA is a multi-sector effort to develop standards and assure mine site compliance with environmental, social and human rights issues. They are yet to publish standards or certify any minerals or any mines. However movement towards independent third party verifcation should be seen as a welcome change to a large number of voluntary, self reporting corporate social responsibility promises.
Small scale mining
While large scale mining is at a very preliminary stage of establishing a verifable supply chain, several initiatives are already underway for Artisanal and Small Scale Mining (ASM), a sector where the need for sustainable economic and social development is perhaps the greatest. ASM is usually characterized by smaller operations that use less technology and mineral resources that are easy to access with small amounts of capital investment.
Conservative estimates by the International Labour Organisation (ILO) in 1999 found that ASM employs a staggering 11 to 13 million people in over 30 countries, and between 80 and 100 million people depend on it as part of their livelihood strategies.3
Furthermore, these miners produce about $2bn worth of gold, gems and other precious metals per year. It is important to note that as commodity prices soar, more people are turning towards mining as a way to cope with their poverty. This means that there is a growing need (and opportunity) for small scale mining to evolve into a rewarding activity.
Unfortunately, good statistics about artisanal and small scale miners are hard to come by because the majority of ASM operations are informal, and often miners do not have legal titles to the area which they mine. National governments have also been reluctant to pursue progressive policies of formalization (more often they channel their resources into attracting larger mining companies within their borders) and have usually chosen to ignore small mining or interpret it as a problem rather than an opportunity for development. This means that small scale miners continue to work in highly insecure and remote environments, lack direct market access and are frequently forced to use profteering middle men which reduce their economic gains. Most experts agree that formalization of this sector is a necessary prerequisite for development, as well as for a responsible and traceable supply chain of precious minerals and gems.
In October 2007, the frst “Ethical Jewellery Summit for Artisanal and Small Scale Miners” was convened at the World Bank in Washington D.C. (home of the Communities and Small Scale Mining Secretariat). Stakeholders discussed how standards and third party verifcation for jewellery products labelled ethical or fair trade might work.
The Kimberley Process
The most high profle initiative for responsible jewellery is the Kimberley Process Certifcation Scheme (KPCS) (www.kimberleyprocess.com) which was established in 2003 by stakeholders who wanted to protect the integrity of the diamond industry by stopping the fow of confict diamonds onto the legitimate market. This process aims to stop diamond money funding rebel groups by using a ‘chain of custody’ to trace diamonds from extraction to retail.
The Kimberley Process is a joint effort between 48 countries (with the European Union being one member), industry associations, multinational retailers, traders, cutters and NGOs. Member countries who implement the process agree to only export or import diamonds with other members who meet minimum requirements (mainly traceability and transparent reporting of diamonds and revenues).Estimates suggest that confict diamonds now represent a fraction of one percent of the international trade in diamonds, compared to up to 15% in the 1990s.4
This progress is substantial, and has reinforced ongoing efforts for peace in diamond rich countries in Africa. There is still a lack of capacity and/or political will from some member states to meet requirements. In June 2008, for example, a coalition of civil society groups made calls for the removal of Venezuela from the process because of a lack of reporting, and an unwillingness to have an external evaluation. Although civil society activism is always a vital watchdog, one would expect that with such a large buy in from governments and big business, the process would have better ways to regulate its membership, and penalize non-compliance.
For industry, consumer confdence in the confict free claims is essential, and has been the primary reason that they have invested time and money to implement the process. Yet, industry and civil society are solely observer participants in the process, with governments taking the lead on implementation. Thus, Kimberley’s strength may also be part of its limitation. It has brought governments and industry together to develop global regulation to prevent overt confict. However, this sphere of global governance may makes it challenging to expand objectives to broader social dimensions.
Kimberley is unlikely to ever guarantee that diamonds are mined in good labour conditions, that human rights are respected, or that royalties are spent by governments in an accountable way. Since many other factors are necessary for natural resources to be translated into poverty alleviation for diamond diggers,
the Diamond Development Initiative (DDI) (www.ddiglobal.org) was created in 2007 as multi-stakeholder NGO (mainly resourced by Kimberley participants)5 to engage with the political, social and economic challenges facing artisanal diamond miners and their communities.
Currently, the DDI is formulating principals and standards for governments, donors and civil society out of consultations that happened in Sierra Leone. They also expect to begin working in Angola and the Democratic Republic of Congo in the near future. The DI is also scoping out the potential of certifying diamonds ‘ethical’ with a holistic set of indicators, and an independent verifed supply chain.
A grassroots approach
The Association for Responsible Mining (ARM) (www.communitymining.org) is a Colombian based organisation with global aspirations to certify fair trade gold and make artisanal and small scale mining a ‘formalized, organized and proftable activity.’ One of the most pioneering aspects of ARM is that it is rooted in a bottom-up approach and the leadership has consistently worked to include miners in the decision making and standards setting process. Miners, NGOs, academics and industry are all represented on the Board of Directors. ARM has also supported the development of national and regional producer organisations to link miners and encourage learning amongst them.
This philosophy of collective decision making has a lot to do with how ARM was founded. It was born out of the Oro Verde or Green Gold (www.greengold-oroverde.org) experience that has been producing a responsible and traceable supply chain of gold since 2004. Oro Verde was successfully able to demonstrate that there is a vibrant niche market of consumers who are demanding that the jewellery they buy is produced in a sustainable manner.
Yet, the 194 Afro-Colombian families from the Chocó region of Colombia who collectively own Oro Verde, and produced about 6.5 kg of certifed gold and associated platinum last year, cannot possibly produce enough for the growing number of ethical consumers. As a response, the leadership of Oro Verde 6 decided to ‘scale-up’ their model by incubating ARM. Its mandate is to develop a universal set of standards applicable to various types and regions of artisanal and small scale mining, provide support to producers who are working towards certifcation, and advocate for more ormalisation of this sector.
Currently they are pilot testing a fairtrade gold standard at nine mining operations in Bolivia, Colombia, Ecuador and Peru. This standard has been developed in extensive consultation with miners and practitioner-researchers in all the pilot regions, as well as in Mongolia, Madagascar, Tanzania, Uganda and Mozambique. The network is experimenting with different methodologies7 to break power relations so that miners, academics, and experts can sit together and debate standards.
On the distribution side, ARM is attempting to create alternative sources of income through initiatives such as its partnership with the UK based affliate, the Ethical Bullion Company (a refning and trading branch of the supply chain). Negotiations are currently ongoing to establish formal ties between the Ethical Bullion Company, ARM and producer associations. This should include channelling back a percentage of profts from the sale of gold to producer associations and their communities to create a long-term source of development fnance. It should also ensure that the Ethical Bullion Company retains the values of the miners and their vision for responsibly produced jewellery. Within the year, ARM aims to wrap up the frst phase of pilot projects in Latin America, fnalise standards, and get certifcation of fair trade gold underway. Future plans include certifying platinum and silver as well as coloured gem stones.
ARM still needs to come to a decision about who they will use to independently certify their gold, adapt their model to regions outside of Latin America, and formulate a plan to distribute and market the gold. One option is to brand the jewellery under an existing ethical certifcation. Both ARM and the DDI have started to explore the possibility of certifying with the international Fairtrade Labelling Organisation (www.fairtrade.net), or perhaps creating another brand that is exclusively for jewellery.
In any case, it seems that some kind of ethically verifed jewellery may not be that far off. Of course ethical consumers still need to be asking diffcult questions of any claims that jewellers may be making. But the dream of linking genuine grassroots development projects with sympatheritic western jewellery consumers look close to being realised.Natasha Khamis is currently a Research Intern at the International Development Centre (IDRC) in Ottawa, Canada. The opinions expressed in this article do not necessarily represent the views of IDRC.
What’s in the shops now
Most consumers can be fairly sure that diamonds on the market now are confict free - it is harder to determine if they were produced under socially and environmentally sound conditions. De Beers currently produces 40% of the world’s diamonds, and they claim that all of them are confict free; which is not surprising because they no longer source from African countries with a history of confict.
Even so, there is no source of independently verifed ethical diamonds – in large scale or small scale operations. As for gold, Oro Verde is the only source of third party assured ethical gold, and supplies UK based Cred Jewellery (www.credjewellery.com) and Fif Bijoux (www.ffbijoux.com), two independent jewellers.
1 Diamond production has been consistently growing recently, with expectations of future growth because of large emerging markets such as China or India. It surpassed $11 billion dollars in production in 2006, without taking into account all the value adding steps on the way to retail. Accessed from: https://mmsd.mms.nrcan.gc.ca/kimberleystats/Global_Summary%20-%202006%20chart.pdf
2 According to GFMS – a London-based consultancy
3 ILO. 1999. Social and Labour Issues in Small Scale Mining. International Labour Organisation, Report for the discussion at the Tri-partite Meeting on Social and Labour Issues in Small-scale Mines. p. 1- 101. Available from: http://www.natural-resources.org/minerals/CD/docs/ilo/TMSSM_1999.pdf
4 This statistic is reported on the offcial Kimberley Process website. Accessed from: www.kimberleyprocess.com
5 DDI has is governed by a Board of Directors and Advisory Group, including NGO and Industry and Academic Representatives. Founding organisations included: The Partnership Africa Canada, Global Witness, The Foundation for Environmental Security and Sustainability, De Beers, the Rapaport Group, the International Diamond Manufacturer’s Association and the Communities and Small Scale Mining Secretariat of the World Bank (CASM)
6 Oro Verde is owned and operated by the Community Councils of Condoto and Tado, and two Colombian based NGOs, Mojarras Foundation, and Amigos del Chocó
7 strategy that ARM has used is the Refect-Action (www.refect-action.org) which is a tool for adult learning for social change